Google does look at it but they try to build a filter into their algo. It is usually not something you will see banned immediately. It will all come out in the wash sooner or later.
I had written a long answer to your question as a post and decided to cancel it because I decided I was providing TOO much information and was not discouraging you enough, so here's the short of it.
If you do get caught cloaking, expect one of the more severe penalties that SEs can apply.
Before you take the risks, you better prove to yourself that the monetary reward of cloaking is worth it.
If it's really worth the risk, find a professional firm to do it for you -- prepare to pay out the nose for it.
Ugly subject for me, so I will not be responding on this subject anymore.
jbgilbert, your post is so funny.....I also wrote a huge reply and then deleted the entire thing.....Too much info is not in our best interests!
korkus2000 is I believe correct TheWebographer.
GG stated in an earlier posting that this is usually the case although it would be nice to see these filters working properly.
I know of one company that has over 200 keyword domains listed in Google all interlinked and with the same content plus one or two more companies which use cloaking and hidden text/links.
The sooner the filters find and remove them the better
Its a tough topic in here, many do it. Its hard really even to comment too much.
I will say this, I have made tons of pages for the search engines on my keywords, and when people click the link, they show up at the URL, no cloaking.
I personally think this is 100 times better. First off the title and H1 is exactly what they typed in, 2nd it just takes a little effort and time to do, and you have no chance of getting removed from the index for making a real page.
Now to your question I have reported alot of cloaked pages as Im seeing them more and more, still there.... I just optimize my REAL pages better then their cloaked pages and walah......no worries, and I still beat them.
Cloaking is not a magic wand which will get you on top. If it's one cloaked page you are talking about then definitely beatable with clean SEO (would take time) On page factors are not as important nowadays as External factors.
If it's not a single site you are talking about then I would say best of luck. HTH :)
If you use the " On Click Event Handler " so that you have a static page tied in to your link but when you click on the link you are sent to the dynamic page, would this be considered cloaking? I am using it to get my static page ranked well since my dynamic pages built through my shopping cart never rank.
I also want my static page to rank right underneath my index page for the keyword phrase i am using. The static page is real and built for the users to land on but i would rather they avoid the page if they already landed on my index page, so i used the Event Handler to move them directly into my shopping cart pages. This also keeps my pages interlinked directly from my index page whihc hopefully should rank high.
JustBinoculars, that sounds like a bad way of doing it. Usually you can set it up so at least some of your cart pages get ranked just by minimizing the query string in the URL or creating different links from within the shopping cart based on user agents. There is plenty of info as to how, and it works well, and Google actually prefers it so they don't end up indexing duplicate pages thousands of times just because they have different session id's for example.