A major multistate settlement announced on December 22, 2025 holds Mercedes-Benz USA accountable for selling diesel vehicles with software that cheated emissions tests, potentially worsening air pollution and misleading car buyers for years. This deal delivers significant financial penalties, direct payments to affected owners, and stricter rules to protect consumers and the environment — an outcome that affects thousands of drivers and communities nationwide.
In a collaborative move led by New York Attorney General Letitia James, 50 attorneys general negotiated the nearly $150 million settlement to address violations of environmental and consumer laws tied to vehicles that emitted harmful pollutants far above legal limits during normal driving.
What Happened: The Emissions Case Explained
Over the last decade and a half, Mercedes sold hundreds of thousands of diesel vehicles equipped with undisclosed software designed to make pollution controls appear compliant during laboratory testing. Under everyday driving conditions, the emissions systems were less effective — releasing 30 to 40 times the allowed levels of harmful pollutants such as nitrogen oxides (NOₓ).
This scheme not only flouted environmental standards but also misled buyers who were told the vehicles were “clean,” “green,” or ultra-low emissions — claims that simply weren’t true in real-world use.
Mercedes installed this software in diesel vehicles sold between 2008 and 2017, with more than 19,000 registered in New York alone.
The Settlement: Money, Repairs, and Accountability
Under the agreement:
• Immediate Payments to States:
Mercedes is paying $120 million upfront to the coalition of attorneys general. New York’s share — over $13.5 million — will fund air pollution reduction, mitigation programs, and environmental enforcement in the state.
• Additional Penalty Tied to Repairs:
Up to $29.7 million in penalties is currently suspended and will be reduced by $750 per vehicle that Mercedes either repairs or permanently removes from U.S. roads.
• Consumer Relief:
Owners and lessees of affected Mercedes diesel vehicles can receive a $2,000 payment if their vehicle undergoes an Approved Emissions Modification (AEM) — a fix designed to bring the vehicle into compliance with emissions standards. Eligible owners must file a claim by September 30, 2026, and Mercedes must directly mail notices explaining how to participate.
• Extended Warranty and Reporting:
Mercedes must provide an extended emissions warranty for vehicles that receive the modification and regularly report repair and compliance data to state regulators.
Why This Settlement Matters to You
Protecting Public Health
Diesel emissions contain high levels of nitrogen oxides — pollutants that can aggravate asthma, contribute to smog, and harm air quality. Cars that emit at 30-40× the legal limit can meaningfully worsen local air pollution, especially in urban areas.
Fairness for Consumers
Drivers who bought these diesel vehicles under the impression they were “clean” now have access to meaningful compensation and repairs at no additional cost — helping ensure that they’re not stuck with a faulty or overpriced product.
Stronger Industry Accountability
The settlement includes new restrictions on Mercedes’ marketing and sales practices, banning claims about low emissions or environmental friendliness unless factually supported. Mercedes is also prohibited from selling or leasing any diesel vehicles with the same illegal emissions-cheating devices.
A Coordinated Legal Effort Across States
Attorney General James led this case with eight other attorneys general playing executive committee roles, and 50 states and territories joined the settlement effort — a nationwide coalition emphasizing cross-jurisdiction enforcement of environmental and consumer laws. New York State Attorney General
This mirrors — and further extends — earlier actions against automakers for similar conduct. Past settlements with Volkswagen, Fiat Chrysler, and others over emissions cheating are part of a broader trend of oversight aimed at holding carmakers to real-world standards, not just laboratory results. ag.state.mn.us
What Affected Vehicle Owners Should Do
If you own or lease a Mercedes diesel vehicle from the affected model years, here’s what to know:
✔ Look for Official Notices:
Mercedes must mail information to registered owners and lessees explaining how to claim the $2,000 payment and emissions fix.
✔ File by the Deadline:
To receive the consumer relief payment, claims must be submitted by September 30, 2026.
✔ Get the Emissions Fix:
Approved emissions modifications will be provided, along with an extended warranty to help protect your vehicle’s long-term performance.
What Comes Next
The settlement must still undergo court approval, after which participating states will oversee compliance and reimbursement programs. If Mercedes fails to meet its obligations — whether in repairing vehicles or reporting progress — additional penalties could be triggered.
This case underscores a broader shift toward greater accountability for automakers and highlights the role of state enforcement in protecting environmental quality and consumer rights — especially when federal oversight isn’t enough on its own.
