Simply reporting no data, or not reporting at all, wont remove the prior reporting.
Furnishers usuallly report monthly be simply repeating the full string of data, and updating those codes where information has changed.
That signifies that the prior status remains the same, or has changed. If they omit any specific code, that implies no change without specifically reporting as such.
The pror status is assumed to continue.
They must, to remove any prior reporting, specifically instruct the CRA to delete that item.
As to the legality of deletions, the pertinent provision of the FCRA defining furnsher obligations is section 623(a)(1)(A),
That section states that a furnisher may not knowingly report inaccurate information. There is no issue of furnisher violation by deletion of reporting that was not even required in the first place.
The argument against deletion is not a legal one, it is one of whether it is in the best interest of the credit reporting system.
By removing information that was presumably accurate, they deprive others pulling the consumer's credit report of a complete view of the consumer's actual history.
Thus, if carried to estremes, blanket deltion of prior adverse items would not be in the best interest of integrity of the credt reporting system.
In that vein, the CRAs have included in their credit reporting manual their policy statement that furnishers should not delete prior adverse reporting based on payment of a debt. That is their business polucy in order to maintian the completeness, and thus value, of credit reports they sell to others. It's, again, not a violation on the part of a furnisher if they choose to do so.
