Mercedes-Benz to pay nearly $150m over illegal, deceitful diesel emissions software

*A $150 million settlement with Mercedes-Benz resolves emissions claims, providing $2,000 to eligible diesel consumers for repairs, as US regulators reveal the auto manufacturer used an illegal ‘defeat device’ in diesel vehicles to cheat on emissions tests for several years

Isola Moses | ConsumerConnect

A bipartisan coalition of 51 Attorneys-General has reached a nearly $150 million settlement with Mercedes-Benz USA over the leading automaker’s deployment of unlawful emissions-cheating software in diesel vehicles for several years.

New York Attorney-General Letitia James announced this development Tuesday, December 23, 2025.

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ConsumerConnect learnt the agreement has resolved claims that Mercedes equipped hundreds of thousands of diesel vehicles with undisclosed software designed to manipulate emissions tests, mislead consumers, and illegally pollute communities across the American country.

New York and eight other states led the multistate investigation into the matter.

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Under the settlement, Mercedes would pay $149,673,750 to the states, including more than $13.5 million to New York, and will provide $2,000 payments to eligible vehicle owners and lessees whose cars receive required emissions repairs, agency report said.

The company must also implement sweeping compliance reforms and submit to ongoing oversight.

On Mercedes’ years-long emissions deception

Investigators also disclosed that Mercedes installed unlawful “defeat device” software in diesel vehicles that allowed them to pass government emissions tests while producing far higher pollution levels during normal driving, report noted.

The software apparently reduced emissions only under laboratory testing conditions.

On the road, the vehicles emitted nitrogen oxides and other pollutants at levels sometimes 30 to 40 times above legal limits, regulators said.

Impact of flouting regulatory instructions

The US regulators noted that those emissions contribute to smog, respiratory illness, and other public health risks for consumers.

The New York Attorney-General’s Office, in a statement, said: “This unlawful software enabled Mercedes to obtain emissions certifications that the vehicles did not actually qualify for.”

Between 2008 and 2017, Mercedes sold over 200,000 affected diesel vehicles nationwide, including more than 19,000 registered in New York, report stated.

Misleading information packaged for consumers

It is equally that Mercedes-Benz misled consumers with ‘clean diesel’ claims, as investigators concluded that the automobile manufacturer deceived buyers by marketing its diesel vehicles as “environmentally friendly”.

The company advertised the cars as producing “ultra-low emissions,” described them as “clean” and “green,” and claimed they were among “the world’s cleanest diesel automobiles.”

Mercedes also touted technology that allegedly converted harmful pollutants into “pure, earth-friendly nitrogen and water.”

However, state officials in the US pooh-poohed the company claims, stating “in reality, the vehicles emitted far more pollution than permitted and did not operate as advertised or certified.”

Attorney-General James said the conduct went on for nearly a decade.

James also said: “Mercedes promised New Yorkers clean, green cars, but instead sold vehicles that polluted our air and put public health at risk.

“For nearly a decade, Mercedes misled regulators and consumers while its vehicles spewed toxic emissions into our communities.”

Investigation launched after Federal case

It was learnt the multistate probe into the company’s infractions began 2020, following the conclusion of a related Federal investigation.

As part of a nine-state executive committee, the New York Attorney-General’s Office reviewed over 350,000 documents and interviewed numerous witnesses.

That investigation ultimately found that Mercedes’ undisclosed software masked the vehicles’ true pollution levels, and allowed the company to improperly obtain emissions certifications.

Money for pollution control and consumers

Meanwhile, as part of the settlement, Mercedes-Benz will immediately pay $120 million to the participating states, in the US, according to report.

New York’s share—$13,530,088—will be used to prevent, reduce, and mitigate air pollution across the state.

A $29,673,750 additional

penalty is temporarily suspended, and will be reduced by $750 for each affected vehicle that Mercedes repairs, removes from the road, or buys back.

In order to encourage repairs, Mercedes must offer $2,000 payments to eligible affected car owners and lessees whose vehicles receive an Approved Emissions Modification.

Claims must be submitted by September 30, 2026. Mercedes, therefore, is required to notify eligible consumers by mail, and provide an extended emissions warranty for vehicles that undergo the repair.

Penalties for Mercedes over infractions

US Department of Environmental Conservation Commissioner Amanda Lefton said the settlement delivered both accountability and environmental benefits.

Lefton stated: “This multi-state settlement not only ensures accountability for bad actors, using illegal emissions-cheating devices.

“It also importantly delivers more than $13.5 million to New York to reduce harmful emissions and help eligible consumers pay for costly vehicle repairs.”

In regard to strict compliance and oversight requirements, and beyond the financial penalties, the settlement imposes broad restrictions on Mercedes’ future conduct, report noted.

Besides, the automobile manufacturing company has been barred from selling or leasing diesel vehicles equipped with illegal emissions-cheating devices, from making misleading claims about emissions performance, and from labelling diesel vehicles as clean or low-pollution unless those claims are accurate and substantiated.

Mercedes must also comply with requirements previously imposed in federal court, regularly report to state regulators on vehicle repairs and removals, and submit to additional oversight. Failure to comply could trigger further penalties.

State officials added that the settlement is intended not only to remedy past harm, but to prevent similar misconduct by Mercedes, and others across the auto industry in the United States.

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