The reason Google is against the practice of purchasing and selling links is because doing so could adversely affect the quality of the search results and in turn create a negative experience for the searcher. Google's algorithm is specifically targets high quality websites to list in the search results and wants to ensure their users see these websites when they do searches.
Cheating the system by purchasing or selling links ends up manipulating the search results and thus a user positive experience cannot be guaranteed.
So a few days ago, Google made another announcement, which they called a reminder to webmasters and SEOs not to sell links.
Their advice is to be weary of people that approach you requesting that you link to them for a price. Basically, if you receive an email from someone out of the blue who asks you to link to them while they pay you, just delete the message and move on with your day.
According to a recent video by Google's Matt Cutts, Google sends out hundreds of thousands of notification messages to webmasters in Google Webmaster Tools regarding unatural links on a person's sites pointing to another site. In this case the site owner would receive what's called a 'warning message'.
If you receive a warning for selling links that pass PageRank in Google's Webmaster Tools, you'll see a notification message to look for "possibly artificial or unnatural links on your site pointing to other sites that could be intended to manipulate PageRank." That's an indication that your site has lost trust in Google's index.
The other warning message would be related to the site owner purchasing links.
What could happen if I'm caught?
If you're caught purchasing or selling links, you will be found guilty of violating Google's quality guidelines related to link schemes and your site can loose trust in Google's index. This can ultimately lead to your site being removed from the index, and of course a substantial loss of business.
But I sell links as a part of advertising
Google has a solution for this and it's simple. If you actually are selling links because of advertising purposes, make sure that you add the nofollow attribute to your links. If you don't know how to do this, show this page to your web designer and he or she will take care of it for you:
Talk to your web designer or SEO
If you do link to other people from your website for a cost, one any of your websites, assign your SEO or web designer a little project of going through all the advertising links on your site and making sure the nofollow attribute is present on those links. If you're purchasing links, your best bet is to contact the sites you've paid to link to you and ask them to remove the link to your site. Stop paying them too.
If you can't get some of the links you paid for removed from any of the sites, you can ask Google to disavow those links preemptively - before you get your website in trouble.
If you're going to play with Google you're going to have to do it the honest way. The advise will always be the same - create great content that will make people link to you naturally, engage your visits and keep them coming back for more. That would be the best SEO advice you can get in a nut-shell.
Feel free to leave your comments or experiences with this topic below.