How do they know you're selling links?

I hear all this selling links stuff, but how do they know? is it if you have a massive piece of text saying BUY LINKS or do they look in to the code and match it to link selling websites?

 

You're able to flag sites with your Google Webmaster account, then someone from Google will review your page, and penalize your domain if it warrants it.

 

i think google is mostly knowing that somebody is selling link when someone reports it

 

Isn't being an advertising publisher basically selling links, just through a middle man? How is that dealt with? For instance I display ads from valueclickmedia will I be penalized?

 

I sell direct advertising and have an advertise page. I suppose it is very noticeable. I'm wondering if I should start making all ads nofollow in the near future. I do not want to risk having my site penalized, but still...

 

If you install code from places like textlinkads, it's pretty easy to tell. Also, if you have a section labeled "Sponsors" or something like that would be easy to tell.