The Federal Trade Commission today released the list of top consumer complaints received by the agency in 2010. With 144,159 complaints against the industry, Debt Collection complaints ranked second overall. Unfortunately, this does not come as a surprise. We issued a report that an increasing number of consumers are being hounded by debt collectors for unsubstantiated debt.

The debt collection industry needs to be reformed. As more debt is bought and sold, debt collectors are filing an increasing number of lawsuits against consumers even though often they don’t have proof to back up their claims. Without the proof, debt collectors may sue on invalid debts, such as those that have already been paid. The problem is made worse when consumers don’t receive timely notice that they have been sued on the debt or when the debt is so old that the consumer does not have good records to show whether the debt is owed or the amount claimed is correct.

To address widespread debt collection and debt buying abuses, Consumers Union recommended a number of reforms, including:

End robo-signing and attempts to collect without proper documentation.

Establish a sell by date for all debt: It should be illegal to sell or attempt to collect debt that is more than seven years old, which is the time period after which debt is barred from being reported on a credit report under the federal Fair Credit Reporting Act.

Require debt collectors to provide more information to consumers.

Require debt collectors to submit more detailed information when filing suit.

Increase oversight to ensure consumers are properly notified of lawsuits.

Click here to read our report on the Debt Collection industry