In theory, any entity that lends money to a California resident -- whether operating from a storefront or online -- has to be licensed and follow California laws. In theory, too, the state Department of Corporations and state attorney general can shut down unlicensed lenders.

In practice, however, as the New York Times reported Sunday, payday lenders are operating online -- sometimes from foreign countries or on Indian land -- to evade state laws. And they're aided by large banks.

Certainly, limits on payday lending are needed. In California, the average payday borrower pays $450 in fees to get $255 in cash.

Other states are better. Some states limit annual interest rates to 36% -- following the federal limit for payday loans to people in the U.S. military. Sixteen states and the District of Columbia ban payday lending.

State limits are thrown to the wind, however, with unlicensed online payday lenders. That is the new frontier that state and federal regulators must address. Unlicensed online payday lenders require borrowers to give their bank account information, so they can withdraw from the borrower's account to pay back the loan.

The banks processing these transactions -- including Wells Fargo, Bank of America and JPMorgan Chase -- are licensed and regulated. Regulators should aggressively pursue banks that allow unlicensed online payday lenders to plunder customer bank accounts.

The state and the federal government also should do more to educate the public. Consumers don't often know who is licensed in California. And when unlicensed online lenders take customers to court to collect on usurious loans, judges may not be aware they are dealing with an unlicensed entity that has no right to collect on an illegal transaction.

Assembly Member Roger Dickinson, D-Sacramento, is chairman of the Assembly Banking Committee. He will hold a hearing Monday to shed light on payday lending practices. That hearing should ask: What are the obstacles to shutting down unlicensed online lenders? What tools do state regulators need?

We should not throw up our hands and say, "Borrower beware." Online lending must be brought to heel.