In the video, Mr. Cutts announces that typically, links that are nofollowed cannot actually hurt your website’s Google search rankings. There are exceptions, however.
While it is true in most cases that nofollow links won’t negatively affect a website’s rankings, Google may take ‘manual action’ on nofollow links if you are using them for the purposes of mass spamming at a large scale.
For example, this means that if you are using the links to spam loads of websites, attempting to ‘piggyback’ on a website’s traffic, Google will take manual action in order to deter you from spamming.
How do you tell if someone is using nofollow links in a negative way? In the video, Mr. Cutts explained that “if you are doing it so much that people know you, and they’re really annoyed by you and people spam report about you, we might take some manual spam action, for example.”
No matter how much Google battles bad SEO practice, so-called ‘negative SEO’ will always be present in one form or another. It’s always best to report these types of links to Google, rather than waiting for Google to take manual action.