How does Google track that?

They know they are paid links because people sell them on the internet. Google probably has 99% of the internet cached, so if a site makes references to selling links on their sites or even on other sites they could be tagged as link-sellers and have their outbound links devalued.

I suggest you never talk about selling text links on any of your sites in public.

Everyone sells links. I can't imagine that would hurt you.

Thanks for explaining that.

..except a few sites get removed from the google index when they get caught!

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Perhaps so, but isn't that the reason for the internet? Advertising? Google's business is seaching sites and letting the public know what is out there on the internet. Purchasing a link from a well-known site for your site could only help your ranking, not hurt it. Now, I think that these link farms are a different story.