The issue is more of who you now address your request for deletion to rather than arguments pertaining to the accuracy of their statement that removal is "illegal."
The FCRA does not mandate reporting, and does not prohibit deletion of reporting.
The FCRA mandate is that what is reported cannot knowingly be inaccurate.
The issue with good-will deletions is not violation of the statute, it is potential non-compliance with their credit reporting agreements with the CRAs.
The CRAs have a vested business interest in maitaining the completeness of credit reports they sell, and dont want accurate information removed. Such subjective removals could decrease the value of credit reports, and if carried to extreme, removal of all derogs based on payment of the debt would drastically affect the completeness of consumer credit information, and skew scoring.
To ensure compliance with their credit reporting agreements, many furnishers (creditors, businesses and debt collectors) implement internal policy statements and pass them down to their employees that state that it is improper, or even contrary to the FCRA, for delete.
Underlings are then bound by that policy, and have no discretion. They wll often incorrectly state that the policy itself was implemented by some prohibition of law. However, they need provide no reason to deny deletion, and thus it is a bit fruitless to continue to argue with the denying employee.
The next step should be to address your request to upper management, such as by contacting their executive office.
Upper management sets the policy, and only they have discretion to grant exceptions.
Sending continued good-will requests to underlings is thus often futile.
