Years ago, such cases were single. For example, to the site of one successful client we found a link in an international site for illegal software. The effect was – a decline of first to fourth page. Catastrophic collapse. After hard work (which took a few months) the site was on the 1st page again.
Nowadays negative SEO is practice. Much easier and cheaper to harm the client to drop it down in SERP and you – rise.
Typically, the technique is applied – placing a link to a competitor’s site in another compromised site (porn site, hacking site, site for specific pharmaceutical products – Botox, Viagra) or include competitive site in low quality directory.
Therefore, it is important to take steps to make your site quality and proof against such evil influences. Then, even when harmful actions come, it will not affect it and hurt it.
No bad links
Do not include your site in spammy or compromised e-catalogs or directories. Better to have fewer, but quality links, checked and approved manually. There are good business directories where at low cost your site will be included – with logo, link, description and other contact information.
Provides a rich, interesting and useful content. Include video, files for download and everything that can be of benefit to the user.
It is important to have a balance between links and social signals (these include sharing on social networks, pluses, re-sharing and commenting). So – if you do only linkbilding to your site, or just social signals – this is not good. Work out in both directions, maintaining a balance between these two methods in parallel.
Avoid over-optimizating your site – 100 % keywords in ALT Tag, 100% keywords in TITLE tags, links, do your content rich in synonyms and readable.
All these tasks will improve the ranking of your site and make it almost invulnerable to any damage and reports made by your competitors to you.
The only completely invulnerable site that I know is Matt Cutts’ site! 🙂