I know some of them perform a somewhat valid service - and without the ability to collect debt then lenders would be much more reluctant to lend - but something needs to be done about unscrupulous debt collectors. Whats more, its not a minority of them but a majority of the industry that engages in unscrupulous practices.
Want to solve it? Propose a two strikes law that puts the senior management in the federal pokey with the booty bandit.
As it is though, you can generally sue not only the debt collection agency but also the lender who claims the debt for statutory damages (10k) plus attorney fees under the Fair Credit Reporting Act if they are going after you for a phoney charge. Most folks don't realize that though, and these serpents play upon the consumers lack of knowledge.
As I said, cut their balls off. It'll fix the problem