Google says: Beware of SEO firms that send you emails out of the blue.
Even we get these SPAM emails too:

“Dear thehostingpool,
I visited your website and noticed that you are not listed in most of the major search engines and directories…”

You should reserve the same skepticism for unsolicited emails about search engines as you do for “miracle” diet pills or requests to help transfer funds from deceased uncles in Nigeria.

Google says: No one can guarantee a #1 ranking on Google.
Beware of SEOs that claim to guarantee rankings, alleging a “special relationship” with Google, or who promise a “priority submit” to Google. There is no such thing as a priority submit for Google. In fact, the only way to submit a site to Google directly is through their Add URL page or by submitting a Sitemap.

Google says: Be careful if the SEO won’t clearly explain what they intend to do.
If you are going to give them FTP access to your server, they should be up-front in explaining all the changes they intend to make to your site. If an SEO creates deceptive or misleading content on your site, your site could be removed entirely from Google’s index. Remember, you are ultimately responsible for the actions of any SEO you hire to promote your website. Be sure you know exactly what they intend to do.

Google says: You should never have to link to an SEO.
Avoid SEOs that talk about the power of “free-for-all” links, link popularity schemes, or submitting your site to thousands of search engines. These are typically useless exercises that don’t affect your ranking in the results of the major search engines.

Google says: Be sure to understand where the money goes.
Google doesn’t sell better ranking in their search results. There are several other search engines who combine pay-per-click or pay-for-inclusion results with their regular web search results. Some SEOs may promise to rank you highly in search engines, but place you in the advertising section rather than in the organic search results. This scam doesn’t work with Google because their advertising is clearly labeled and separated from their organic results, but be sure to ask any SEO you’re considering what % of fees goes toward the organic listings ranking and which apply toward sponsored advertising.

Google says: Some common SEO abuses?
One common scam is the creation of “shadow” domains that funnel users to a site by using deceptive redirects. These shadow domains often will be owned by the SEO who claims to be working on a client’s behalf. However, if the relationship goes bad, the SEO may point the domain to a competitor’s site. If that happens, the client has paid to develop a competing site owned entirely by the SEO.

Another illicit practice is to place “doorway” pages loaded with keywords on the client’s site somewhere. The SEO says this will make the page more relevant for more queries. This is false! Individual pages are rarely relevant for a wide range of keywords. More insidious, however, is that the doorway pages can often contain hidden links to the SEO’s other clients also. Doorway pages can drain away the link popularity of a site and could route it through to the SEO ‘s own site and its other clients.

Google says: Some other things to look out for.
Here are a few warning signs that you may be dealing with a questionable  SEO company. Don’t deal with them if they:

• own shadow domains
• put links to their other clients on doorway pages
• don’t distinguish between actual search results and ads that appear on search results pages
• guarantee ranking, but only on obscure, long keyword phrases you would get anyway
• operate with multiple aliases or falsified WHOIS info
• get traffic from “fake” search engines, spyware, or scumware
• has had domains removed from Google’s index or are not listed in the Google index