Google Goes After Paid Links

Question. What if it's a paid link that you paid for but purely to drive traffic to your site and not SEO purposes. Does this mean that people now have to add NOFOLLOW tags to all paid links so that google doesn't think you're doing it for the benefit of search results...?

I would like that answer too

If the link is purely for traffic, then Yes, a NOFOLLOW tag would be recommended. At least this way you can be sure you don't have any chance of being penalized.

What about if the links are from paid directories?

Weil, it's really at Google's discretion. Unfortunately they haven't been overly consistent.

there have been instances where they've penalized some, but most have been okay...i haven't heard any complaints from Yahoo! Directory listed sites for example.

but what if my competitor bought such links and point it to my site? I didn't make nything for it but google will drop me down!? it's crazy!!!!