Five things to verify in 24 hours. Then three options, in order of effort.
Write the landlord a polite letter citing the specific rule. Most "illegal" increases are mistakes — landlord did not realize the cap applied, or miscalculated. Pointing it out usually resolves it without conflict.
If they refuse to back off: file a complaint with your local rent board (if you have one), or with the California Department of Real Estate. As a last resort, small claims court for the over-charge.
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