Label is not written to file properties.
CASB securlet activity reports: Failed to tag file
Enforce Incident: REST Action Failed
Verify the response rule is formatted according to the documentation.
{"labelName":"confidential", "justificationText":"The document contains confidential information."}
Paste the sample text into notepad, modify the values and then paste the new content into the response rule.
Notepad will clear invalid Ascii Characters and can reduce typo's.
Additional testing: Creating a new label in Azure and verify the label sync's to enforce.