No votes left, but I also agree this is prohibits or makes extremely complex the migration to ODFB for many entities.
At this point, the Office 365 service only allows for the retention of audit entries for 90 days. Can you provide us more information regarding your requirement to keep logs for 3 years. Is this a legal obligation? Please provide details around the specific audit entries you would like to retain for an extended period of time.
There are a plethora of government regulations which require retention of data for periods much longer than 90 days. Honestly, I can't think of a single legal requirement that, if applicable to logs, would be any period of time measured in the "days." More like, the "years."
The workaround mentioned by Scott is obviously feasible, but definitely shouldn't be the only way available.
I tried to copy the majority of a different comment here, but it appears your system ate it as a duplicate or something. Essentially, if this is confirmed (I don't use this service, so I don't have the means to reproduce), this is an extremely critical bug that needs to be immediately fixed and/or confirmed to be fixed.
This doesn't apply to me, but I voted for it because this clearly an extremely critical bug was reported over a year ago. Is this fixed yet?
In place holds are generally used for federal, state, or internal regulatory or legal requirements. Essentially, this is the truly critical data that cannot be lost no matter what the cost, and this apparent bug has been reported here for over a year.
Whatever team monitors uservoice needs to immediately forward this over to the appropriate department within Microsoft to resolve this and/or confirm resolution. As it stands, this bug entirely negates any data retention or compliance policies guaranteed by Microsoft through its product statements and SLAs.
Consider this, MS rep that will be reading this: how does Microsoft itself remain in compliance with its own regulatory requirements given that it is likely using its own products with this data retention issue? How about the government agencies, institutions, and other legal entities that use your product? This makes it impossible for anyone using your service to remain in compliance with the law. This level of exposure this subjects an entity to is astounding. Sort of like "hey, we were going to comply with this subpoena or FOIA request, but Joe the warehouse guy decided to just magnetize the hard drive instead" kind of exposure.
I agree with Douglas Plumley on the avenue, but this issue is not some minor display bug or feature request; this is the kind of critical bug that when reported via any avenue needs to be rectified right away.
David Peet was nice enough to additionally report another critical bug that it appears you have ignored, but should also have immediately be forwarded to the appropriate team and fixed / confirmed to be fixed: https://office365.uservoice.com/forums/289138-office-365-security-compliance/suggestions/16106458-option-to-preserve-contents-of-sharepoint-recycle
I will be mirroring this comment on that, as well. They both need to be fixed immediately if they are not yet.