Lawsuits are hard. They take years, are very stressful, and you generally need significant up-front capital to make them happen. Then if (if!) you win a lawsuit the cash doesn't magically appear when the judge bangs his gavel; there's a whole process for trying to extract your money. And if they have spent the money and are now broke? Well, basically, tough shit.
And of course, winning a lawsuit and recovering money doesn't actually turn back the clock on the lost time and heartache. It just means you've managed to get some of your cash back. Which may feel like a very poor return, and is certainly a waste.
And that's even before we get to the various theoretical reasons that regulation makes sense here. For example, there's an information asymmetry: these instant schools know a ton more about what they're selling than their customers do, making it much easier for them to exploit. Plus they're selling training; students, by definition, are missing a lot of important knowledge and are outsiders to the industry. The normal feedback loops of commerce work best with repeat purchases; one-time purchases greatly restrict the invisible hand's power. And if nothing else, we need a regulator to make sure that the statistics are solid.
As somebody who has hired developers in CA and will likely do so again, I think this is great. I don't want bright young people getting fucked over. I want them to enter the industry in a way that gives them a real shot at a career.