It's a real problem. I do SEO for a living and work with hundreds of sites at a large agency. I've seen several hit with negative SEO from competitors ordering link gigs on Fiverr or asking some low quality link provider on Digital Point to build 10,000 links in a short period of time.

This has killed rankings for a few sites that I've worked with. It is really easy to get thousands of spam/porn sites to link to a competitor with exact match anchor text for whatever keyword you want. And it's basically impossible to figure out which competitor is doing it to you.

Google used to just 'devalue' all crap links pointing to a site. A link could never hurt you. Now that links can hurt your site, it's totally wide open for this type of thing to happen.

Here's a good case study/experiment done on negative SEO if anybody is interested in further reading: http://trafficplanet.com/topic/2372-successful-negative-seo-...