I encourage my kids to go through the established framework of rules when they catch shit from their classmates. It often fails, and when they reach their breaking point I counsel them to follow the method that worked for me: put the fear of the gods into the bully. Just as sure as they are bullies, they are cowards, and all you need to do is...
..."man the fuck up and punch them in the teeth"
once. It carries its own consequences, but it's better than living in fear. This principle applies to a lot of the institutions we hold dear as free peoples of our countries, the concept that when all else fails we are well within our rights to use force to protect ourselves. Labor unions, political activists, revolutionaries... whatever. In the US, the right to bear arms was included in the original bill of rights for this reason- we have the right to fight back but only when the system fails us, as it sadly often does.
As far as the root causes of this shit go, well, that could be its own thread on bad parenting...