Minnesota's Junk Fee Law Exempts Fees, Not Car Dealers — and the Doc Fee Cap Is the Lesser of $350 or Ten Percent

Read the buyer’s order on a Minnesota car deal one line at a time. Whether a line you never saw in the advertised price was allowed to stay out of it turns on which statute authorizes that fee, not on the fact that a dealer charged it.

The shorthand I keep running into on Minnesota’s price-transparency law is that car dealers are out of it. That is not what the statute says, and the difference decides line items.

Minn. Stat. § 325D.44, subd. 1b, removes three things from the all-in pricing rule. The first is this:

(1) fees authorized by law related to the purchase or lease of a motor vehicle that are charged by a motor vehicle dealer, as defined by section 168.27, subdivision 1, paragraph (f);

Read the grammar. The exempt thing is a fee, not a seller. The fee must satisfy three conditions at once: it must be authorized by law, it must be related to the purchase or lease of a motor vehicle, and it must be charged by a motor vehicle dealer as the cross-reference defines that term. A dealer’s whole price disclaimer does not travel through this clause because the dealer is a dealer. Each line on it travels separately, or it does not travel at all.

Which raises the only question that matters here: what does Minnesota law actually authorize a dealer to charge?

The answer is a short list, and the fee at the center of it has not been a flat dollar amount since July 1, 2023.

The documentary fee cap has a ratio in it, and the ratio is three years old

Minn. Stat. § 168.27, subd. 31, is captioned “Documentary fee.” Paragraph (a) sets the terms:

(a) A motor vehicle dealer may not charge a documentary fee or document administration fee in excess of the amounts provided under paragraph (b) for services actually rendered to, for, or on behalf of the retail buyer or lessee to prepare, handle, and process documents for the closing of a motor vehicle retail sale or lease of a vehicle being registered in the state of Minnesota. The fee must be separately stated on the sales agreement maintained under Minnesota Rules, part 7400.5200, and may be excluded from the dealer’s advertised price.

Paragraph (b) supplies the amounts, and it does so in three tiers, each built the same way:

(b) For motor vehicle sales or leases made on or after July 1, 2023, through June 30, 2024, the maximum fee is the lesser of $200 or an amount equal to ten percent of the value of the sale or lease. For motor vehicle sales or leases made on or after July 1, 2024, through June 30, 2025, the maximum fee is the lesser of $275 or an amount equal to ten percent of the value of the sale or lease. For motor vehicle sales or leases made on or after July 1, 2025, the maximum fee is the lesser of $350 or an amount equal to ten percent of the value of the sale or lease.

Three ceilings, one formula. The controlling number is whichever is smaller — the dollar figure or ten percent of the deal.

That structure arrived in 2023 Minn. Laws ch. 68 (H.F. No. 2887), art. 4, § 40, which rewrote subdivision 31 and carried its own effective-date clause: “This section is effective for motor vehicle sales and leases made on or after July 1, 2023.”

The session law also shows what it replaced. The prior text set a flat maximum of $100 for sales made on or after July 1, 2017 through June 30, 2020, and a flat $125 for sales on or after July 1, 2020. No percentage, no proportionality, no floor. The 2023 act struck both figures and inserted the “lesser of” formula, and in the same stroke added the words “of a vehicle being registered in the state of Minnesota” to paragraph (a).

So the ratio is not a 2025 development. It has governed every Minnesota retail motor vehicle sale and lease since July 1, 2023 — eighteen months before § 325D.44, subd. 1a, took effect on January 1, 2025.

Work the arithmetic and the exemption develops a price floor

A percentage cap and a dollar cap cross at one point: where ten percent of the sale equals the dollar figure.

Under the current tier, ten percent of the value equals $350 when the value is $3,500, because $3,500 multiplied by 0.10 is $350. Above $3,500 the dollar figure is the smaller number and the cap is $350. Below $3,500 the percentage is the smaller number and the cap is ten percent of that particular deal.

The same calculation under the middle tier gives $2,750, because $2,750 multiplied by 0.10 is $275. Under the first tier it gives $2,000, because $2,000 multiplied by 0.10 is $200.

Now put the arithmetic on a buyer’s order. Take an invented example, which describes no actual dealer or listing: a used car offered at $2,995, with a flat $350 documentary fee added at signing and kept out of the offered price. Ten percent of $2,995 is $299.50. That is the maximum documentary fee the statute permits on that sale. The $350 charge exceeds it by $50.50. On an $1,800 unit the cap is $180 and the same flat charge exceeds it by $170.

Here is why that overage is worth more than its dollar value. Subdivision 1b(1) exempts fees authorized by law. A documentary fee larger than subdivision 31(b) permits is, by the plain text of subdivision 31(a), a fee the dealer “may not charge”. It is not authorized by law. It therefore never enters the exemption, and the ordinary rule in § 325D.44, subd. 1a(a), applies to it: an advertised, displayed, or offered price that does not include all mandatory fees or surcharges is a deceptive trade practice. The excluded fee has to be in the advertised number.

I read that as a single flat-rate disclaimer producing two distinct problems on the same car — a charge above the statutory maximum, and an advertised price missing a fee that no longer qualifies for the exemption. The dealer who advertises a flat fee on a lot with sub-$3,500 inventory has written the arithmetic into its own disclaimer.

Where this bites hardest is the bottom of the market: older trade-ins, buy-here-pay-here inventory, the cheapest rows on a franchise dealer’s used lot. Those are the buyers least able to absorb a $350 charge and the ones the ratio was built to protect.

The permission to keep the fee out of the price is not in the junk fee law at all

This is the part practitioners skip. Subdivision 1b(1) does not itself authorize anyone to advertise a price without the doc fee in it. It exempts fees that some other law authorizes. The other law is the last clause of § 168.27, subd. 31(a): the fee “may be excluded from the dealer’s advertised price.”

That is the operative permission, and it comes bundled with conditions in the same paragraph:

• The fee must be for services actually rendered “to prepare, handle, and process documents for the closing”. A charge collected where no closing documents were prepared is not the fee the statute describes.
• The transaction must be the sale or lease “of a vehicle being registered in the state of Minnesota”.
• The fee “must be separately stated on the sales agreement maintained under Minnesota Rules, part 7400.5200”.
• And it must sit at or under the paragraph (b) cap.

Minn. R. 7400.5200 is worth reading alongside the statute, because it hands a buyer the proof. Subpart 2 provides that the sales agreement “must be maintained and made available for the registrar’s inspection for three years after the sale of the vehicle”, and item E requires it to contain “an itemized list of all fees and taxes collected in connection with the vehicle transaction”. The buyer’s order is itemized by rule and retained by rule for three years. A dispute about what was charged and what it was called is answerable from a document the dealer is already required to keep.

The other authorized fee has “optional” in its statutory name

Subdivision 31(c) carves one thing out of the documentary fee:

(c) “Documentary fee” and “document administration fee” do not include an optional electronic transfer fee as defined under section 53C.01, subdivision 14.

Follow the cross-reference and the definition is unusually demanding:

“Optional electronic transfer fee” means a charge for services agreed upon between the parties for electronic transmission of ownership records. The charge must be separately stated and identified as “optional electronic transfer fee” on the sales agreement maintained under Minnesota Rules, part 7400.5200. At least half of the fee must be paid to an electronic transmission service provider.

Three elements, all of them checkable against the buyer’s order: the charge is agreed upon between the parties, it is separately stated and identified by that exact phrase, and at least half of it goes to an electronic transmission service provider. The label is not decorative — the statute prescribes the words.

And the first word does the heavy lifting. A fee that is genuinely optional is not a “mandatory fee” under § 325D.44, subd. 1a(b), on any of its three prongs, so the junk fee law had no quarrel with it to begin with. A fee that the buyer cannot decline is not an optional electronic transfer fee, so it is not the thing § 53C.01, subd. 14, defines, so it is not authorized by that section, so subdivision 1b(1) does not reach it — and subdivision 1a does. The statute is built so that the charge is either harmless or unexempt. There is no third setting.

Beyond those two, the charges that comfortably satisfy “authorized by law” are the ones the state itself sets and the dealer merely collects. Minn. Stat. § 168.33, subd. 7(a), imposes “an $8 filing fee … on every vehicle registration renewal, excluding pro rate transactions” and “a $12 filing fee … on every other type of vehicle transaction”. Minn. Stat. § 168A.29, subd. 1(a)(1), covers “filing an application for and the issuance of an original certificate of title, $8.25”, with “a surcharge of $2.25 … added to the fee”, and subdivision 1(b) adds that “the department must be paid $3.50” on top of it — $8.25 plus $2.25 plus $3.50, or $14.00 in all for an original title.

Those are creatures of statute down to the quarter, and I read the exemption as existing in large part so that a dealer’s advertised price does not have to absorb charges that vary with the individual buyer’s registration posture.

Which dealer charges have no statute behind them?

Dealer preparation. Reconditioning. Nitrogen in the tires. VIN etching. Paint and fabric protection. Theft-deterrent registration. Market adjustment. A destination or freight charge re-added at retail after it was already in the manufacturer’s price.

I went looking for a Minnesota statute that authorizes any of those by name and found none. That is a negative, so here is how I ran it: I pulled § 168.27 in full to its History line and read every subdivision caption; I read § 325D.43 in full, which is the definitional section for §§ 325D.43 to 325D.48 and defines seven terms, all of them trademark concepts; and I followed each cross-reference the fee provisions make — to § 168.002, to § 53C.01, and to Minn. R. 7400.5200. None of them names a preparation, reconditioning, protection, or adjustment charge.

A charge with no authorizing statute is not “authorized by law”, so the exemption is unavailable to it, and it is measured by subdivision 1a(b) like any other fee. That test is disjunctive: a mandatory fee includes one that “must be paid in order to purchase the goods or services being advertised”, or that “is not reasonably avoidable by the consumer”, or that “a reasonable person would expect to be included in the purchase of the goods or services being advertised”. A line item printed on every buyer’s order, with no box to decline it, answers the first two on its face.

I want to emphasize where that leaves the exemption. It is real, it does genuine work, and it is narrow. It covers the doc fee within its cap, the optional electronic transfer fee when it is actually optional and actually labeled, and the government charges the state fixes. It does not cover the rest of the disclaimer.

The cross-reference points at a paragraph that defines a different term

One drafting wrinkle will be raised, so take it head on.

Subdivision 1b(1) borrows its class from “section 168.27, subdivision 1, paragraph (f)”. Paragraph (f) reads:

(f) “Dealer” includes licensed new motor vehicle dealers, used motor vehicle dealers, motor vehicle brokers, wholesalers, auctioneers, lessors of new or used motor vehicles, scrap metal processors, used vehicle parts dealers, and salvage pools.

Subdivision 1(a) frames the whole list: “For the purposes of this section, the terms in paragraphs (b) to (o) have the meanings given them”.

Paragraph (f) defines “Dealer”. The junk fee exemption uses the term “motor vehicle dealer”. Those are not the same word, and paragraph (f)’s list sweeps in businesses that do not retail motor vehicles at all — scrap metal processors, used vehicle parts dealers, salvage pools. Two readings are available: the exemption reaches the enumerated categories, or the cross-reference misfires and leaves the exempt class undefined. I have found no Minnesota decision choosing between them. Neither reading enlarges the exemption beyond fees authorized by law, which is the condition that actually controls.

Is a boat a “motor vehicle”? No — but the trailer under it is

Chapter 325D never defines “motor vehicle”. Section 325D.43 defines seven terms and that is not one of them. The definition that governs the section the exemption points into is § 168.27, subd. 1(j):

(j) “Motor vehicle” has the meaning given it in section 168.002, subdivision 18, and also includes a park trailer as defined in section 168.002, subdivision 23.

Section 168.002, subd. 18(a), then supplies the core:

(a) “Motor vehicle” means any self-propelled vehicle designed and originally manufactured to operate primarily on highways, and not operated exclusively upon railroad tracks. It includes any vehicle propelled or drawn by a self-propelled vehicle and includes vehicles known as trackless trolleys that are propelled by electric power obtained from overhead trolley wires but not operated upon rails.

Two clauses, pulling in opposite directions. The first excludes anything not built primarily for the highway. The second sweeps in anything towed.

Paragraph (d) then removes several things by name:

(d) “Motor vehicle” does not include a snowmobile; a manufactured home; a park trailer; an electric personal assistive mobility device as defined in section 169.011, subdivision 26; a motorized foot scooter as defined in section 169.011, subdivision 46; or an electric-assisted bicycle as defined in section 169.011, subdivision 27.

Paragraph (c) removes all-terrain vehicles except two narrow cases — one owned and operated by a physically disabled person and displaying disability plates under paragraph (b), or one “licensed as a motor vehicle before August 1, 1985”.

Sort the showroom against that text. A car, truck, van, motorcycle, or motorhome is a motor vehicle. A travel trailer, boat trailer, utility trailer, or horse trailer is a motor vehicle, because subdivision 18(a) reaches a vehicle “drawn by a self-propelled vehicle”. A park trailer is excluded by subdivision 18(d) but added back for § 168.27 purposes by that section’s subdivision 1(j). A snowmobile is excluded by name. An all-terrain vehicle is excluded but for the two exceptions. A boat or personal watercraft is not “designed and originally manufactured to operate primarily on highways”, and nothing in subdivision 18 brings it back.

That produces a result the industry will not like, and it comes straight from the text: on a single invoice for a boat-and-trailer package, the trailer is a motor vehicle and the boat is not.

The exemption in subdivision 1b(1) is keyed to “the purchase or lease of a motor vehicle”. Where the unit is not a motor vehicle, there is nothing for the exemption to attach to.

The documentary fee authorization runs out at the same edge, and for a second reason. Section 168.27, subd. 31(a), speaks to “the closing of a motor vehicle retail sale or lease of a vehicle being registered in the state of Minnesota”. A sale of something that is not a motor vehicle is not a motor vehicle retail sale, so subdivision 31 neither caps nor authorizes a documentary fee on it — and the permission to exclude the fee “from the dealer’s advertised price” is part of the same paragraph.

The federal rule that would have covered this is gone

Anyone researching dealer add-ons in the last two years has run into the FTC’s Combating Auto Retail Scams Rule, published at 89 Fed. Reg. 590 (Jan. 4, 2024) and codified at 16 C.F.R. pt. 463. As the Commission itself later summarized it, the rule “required accurate pricing disclosures in dealers’ advertising and sales communications”, “required dealers to obtain consumers’ express, informed consent for charges”, and “prohibited the sale of any add-on product or service that confers no benefit to the consumer”.

It is not law. The National Automobile Dealers Association and the Texas Automobile Dealers Association petitioned for review, and on January 27, 2025 the Fifth Circuit held for them on procedure: “The FTC violated its own regulations when it failed to issue an ANPRM for the CARS Rule”. Nat’l Auto. Dealers Ass’n v. FTC, No. 24-60013, slip op. at 14 (5th Cir. Jan. 27, 2025). The court rejected the Commission’s harmless-error argument — “This was not harmless error”, slip op. at 18 — granted the petition and vacated the rule. Judge Higginson dissented, writing that it was “regrettable that our court still sets aside the CARS Rule”, a rule addressing dealer practices “which inflict immense, proven harm on U.S. consumers”. Slip op. at 21 (Higginson, J., dissenting).

The Commission then conformed the Code. In a final rule published at 91 Fed. Reg. 6507 (Feb. 12, 2026) and effective that day, it stated: “This final rule withdraws the CARS Rule published at 89 FR 590 (Jan. 4, 2024) and delayed at 89 FR 13267 (Feb. 22, 2024) to conform the rule with the Fifth Circuit’s decision”. I checked the result rather than assuming it: in the eCFR’s title 16 as issued August 31, 2026, part 463 is absent, while part 464 — the FTC’s separate fee rule — is present. Part 464 does not fill the gap. Section 464.1 defines the rule’s reach as “(1) Live-event tickets; or (2) Short-term lodging, including temporary sleeping accommodations at a hotel, motel, inn, short-term rental, vacation rental, or other place of lodging”. A car is neither.

So there is no federal pricing rule for motor vehicle dealers. The all-in pricing protection a Minnesota car buyer has against an unauthorized add-on comes from Minnesota statutes, which is a large part of why the narrow reading of subdivision 1b(1) matters.

Has a Minnesota court decided any of this?

Not that I can find, and I will say plainly how hard I looked, because a confident negative is worth nothing without its method.

I ran the question five ways — by statutory citation (§ 168.27, subd. 31 and § 325D.44, subds. 1a and 1b), by the doctrinal phrase a court would write (mandatory fees or surcharges; fees authorized by law), by the trade term (doc fee; documentary fee), by the subject (price transparency and junk fee, together with advertised price), and by the archive path where the Minnesota Judicial Branch publishes its slip opinions. None surfaced a Minnesota appellate decision construing either provision.

The Judicial Branch’s own search interface would not answer a script — it returns a 302 challenge — so I confirmed the retrieval path separately by pulling a published Court of Appeals slip opinion from the archive directly and reading its caption and docket number. The path works; there is simply nothing there on these sections yet.

Treat that as what it is. The provisions are new, the appellate silence is expected, and a district court could construe any of this tomorrow.

What a buyer should keep

The listing, captured before the conversation starts. The violation in § 325D.44, subd. 1a(a), is defined by what was advertised, displayed, or offered. A screenshot of the vehicle detail page with its disclaimer is the evidence; the window sticker is not a substitute.

The buyer’s order. Minn. R. 7400.5200, subp. 2, requires it to itemize every fee and tax and requires the dealer to keep it for three years. Every question in this article — what the fee was called, what it was, whether it was separately stated — is answered on that page.

The date of sale. It picks the tier. A sale closed in May 2025 is measured against the lesser of $275 or ten percent; one closed in August 2025 against the lesser of $350 or ten percent.

The sale price used for the calculation. Ten percent of what is the live question on a deal with a trade-in, rebates, or a negative-equity rollover, and the answer determines whether a flat fee cleared the cap.

If something went wrong after the sale rather than at it, different statutes take over — the used-car warranty at Minn. Stat. § 325F.662 and the Truth in Repairs Act for the service department.

Most dealer paperwork also carries an arbitration clause, and what that does to a consumer claim is a separate subject covered in our piece on the Federal Arbitration Act and consumer contracts. For smaller overcharges, conciliation court is often the proportionate forum. And the structural question of which Minnesota statute supplies a damages remedy for a pricing violation in the first place is worked through in our article on where the junk fee law sits in the Deceptive Trade Practices Act.

One last note on the Attorney General’s published guidance. The office’s Price Transparency Law FAQ, revised April 2025, lists the exemptions and renders the first one by quoting it — “fees authorized by law related to the purchase or lease of a motor vehicle that are charged by a motor vehicle dealer”. The quotation marks are the office’s own. The guidance describes a fee category, not an industry, which is the same thing the statute does.

Madgett Law, LLC

Madgett Law, LLC represents Minnesota consumers in deceptive pricing, consumer fraud, landlord-tenant, debt collection, and credit reporting matters, in state and federal court. If a charge appeared on your purchase that was not in the price you were shown, we can tell you whether a statute reaches it and what the documents you already have can show. Call 612-470-6529 or send us a message.

Sources: Minn. Stat. § 325D.44, subd. 1a(a) (advertised, displayed, or offered price must include all mandatory fees or surcharges) and subd. 1a(b) (three-prong “mandatory fee” definition), subd. 1b(1) (exemption for fees authorized by law related to the purchase or lease of a motor vehicle charged by a motor vehicle dealer); Minn. Stat. § 325D.43, subds. 1–8 (definitions for §§ 325D.43 to 325D.48; no definition of “motor vehicle”); Minn. Stat. § 168.27, subd. 1(a) (definitions apply “[f]or the purposes of this section”), subd. 1(f) (definition of “Dealer”), subd. 1(j) (“motor vehicle” takes the § 168.002, subd. 18 meaning and adds a park trailer), subd. 31(a) (documentary fee; services actually rendered; vehicle being registered in Minnesota; separate statement on the Minn. R. 7400.5200 sales agreement; exclusion from the advertised price), subd. 31(b) (three tiers, each the lesser of a dollar figure or ten percent of the value of the sale or lease), subd. 31(c) (optional electronic transfer fee excluded from the defined terms); 2023 Minn. Laws ch. 68 (H.F. No. 2887), art. 4, § 40 (rewriting § 168.27, subd. 31; striking the prior flat $100 and $125 maximums; adding “of a vehicle being registered in the state of Minnesota”; effective for motor vehicle sales and leases made on or after July 1, 2023); Minn. Stat. § 53C.01, subd. 14 (definition of “optional electronic transfer fee”; required label; at least half paid to an electronic transmission service provider); Minn. Stat. § 168.002, subd. 18(a) (definition of “motor vehicle”; highway-primary design; vehicles drawn by a self-propelled vehicle), subd. 18(b)–(c) (all-terrain vehicle exclusion and its two exceptions), subd. 18(d) (exclusion of snowmobiles, manufactured homes, park trailers, and others), subd. 23 (park trailer); Minn. Stat. § 168.33, subd. 7(a)(1)–(2) ($8 and $12 filing fees); Minn. Stat. § 168A.29, subd. 1(a)(1) ($8.25 original title fee and $2.25 surcharge) and subd. 1(b) (additional $3.50); Minn. R. 7400.5200, subp. 1 (documentation on file) and subp. 2, items A–G (sales agreement contents, including item E’s itemized list of all fees and taxes; three-year retention for the registrar’s inspection); Minnesota Attorney General, Price Transparency Law FAQ (rev. 4/2025), p. 2 (exemptions, quoted); Combating Auto Retail Scams Trade Regulation Rule, 89 Fed. Reg. 590 (Jan. 4, 2024), and delay of effective date, 89 Fed. Reg. 13267 (Feb. 22, 2024); National Automobile Dealers Ass’n v. FTC, No. 24-60013, slip op. at 14, 18 (5th Cir. Jan. 27, 2025) (FTC violated its own regulations by failing to issue an ANPRM; error not harmless; petition granted and rule vacated), and id. at 21 (Higginson, J., dissenting); Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule To Conform These Rules to Federal Court Decisions, 91 Fed. Reg. 6507 (Feb. 12, 2026) (CARS Rule withdrawn, effective February 12, 2026; summary of what the CARS Rule had required); 16 C.F.R. § 464.1 (“covered good or service” limited to live-event tickets and short-term lodging), as issued August 31, 2026; eCFR title 16 structure as issued August 31, 2026 (part 463 absent; part 464 present). This article is general legal information about Minnesota law. It is not legal advice, it does not create an attorney–client relationship, and no particular outcome is promised or implied.