Questions
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What to do about bad backlinks hurting authority?
In this case, there is nothing that needs to be done.. you are good to go but in future if there are too many bad links and you suspect negative SEO in play, and you think its affecting you, you may want to create are report and send it to Google with detailed explanation. Hopefully, in future Google allows an option in webmaster tools where you could just go and 'flag' or 'disallow' any backlink that you think is bought by competition to get you down.
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