Ah, I was finally able to access the the PDF they attached to the CFPB complaint. Here's the relevant text:
Your concern, as we understand it, is that you feel your credit reporting on your underlying loans included in the consolidation process should have been absolved of all previous unfavorable information when these loans were retroactively placed on a period of forbearance. In addition, you feel that, by refusing to remove prior unfavorable reporting, FedLoan Servicing is violating the Fair Credit Reporting Act (FCRA).
We are obligated to report true and accurate information under the FCRA (15 U.S.C. § 1681s-2). Our review of your account found that the information submitted to the nationwide consumer reporting agencies accurately reflected the status of your loans at that time. Consequently, we are unable to accommodate your request to remove the reporting. Altering accurate information, even as a one-time courtesy, is not permitted under the law and would jeopardize the integrity of our reporting.
In addition, our legal team has reviewed your complaint and statements regarding Section 623(a)(2) under the FCRA (15 U.S.C. § 1681s-2) and found your arguments to be without merit. You are interpreting the FCRA to imply that FedLoan Servicing is not accurately reporting your credit information, when, according to our records, it is and has since we have been servicing your loans.
After your loans were reported unfavorably in 2013, you requested a period of forbearance on January 14, 2014. The approval of the forbearance period brought your account into a current status and resolved the delinquency. The delinquency existed because you were past due on your student loans at the time of the unfavorable reporting. By resolving your delinquency and bringing your account current, that action allowed your past due bills to be satisfied and your loans to be reported favorably going forward. It did not, however, retroactively remove the unfavorable remarks that had already been reported accurately on your credit history.
As a servicer of federal student loans owned by the U.S. Department of Education, Federal Student Aid, we must follow the guidance of the Department. FedLoan Servicing has received guidance from the Department that no prior unfavorable credit reporting, that was reported accurately at the time, shall be absolved by the application of a retroactive deferment or forbearance. FedLoan Servicing must follow the guidance of the Department. Unless FedLoan Servicing receives direction from the Department, we are, unfortunately, unable to accommodate your request to remove the unfavorable information.
Per FLS's explanation here, it looks like there's a disagreement between the Dept of Ed and the FTC on how retroactive forbearances are treated. If that's the case, looks like this potential lawsuit will need to name both Dept of Ed and FLS?
I'll see what FLS comes back with in response to the letter I sent them earlier this week, but if they don't roll over, I'll have to take this back to my lawyer and see what the appropriate next step is.
