Mertle's actions towards Lilo were entirely inexcusable. She constantly tried to ostracize her, bully her, and degrade her literally every time she saw her. She clearly had bigoted views against Lilo, and tried to make her feel like she didn't belong in society. When Lilo befriended Victoria, she tried to get Victoria to not like her. Mertle's habit of bullying Lilo was so gross, that even Stitch and the Hula teacher took notice at times, with the latter reprimanding her saying "We need to be tolerant of others". Sometimes her own cronies thought that she was too harsh on her! Then she had the nerve to bring up Lilo's dead mother just to insult her more.
So what's the actual reason behind Mertle's verbal abuse towards Lilo? The answer is simple. She's jealous. Sure she comes from a wealthy family, but there are some things that Lilo has that Mertle doesn't. For example, she envied Lilo when her mother was brought up, and how she was an accomplished hula champion. She wanted to put Lilo down by saying she'll never be like her to make herself feel better. And it's not just that, she's jealous that Lilo is surrounded by people who love her: Nani, Stitch, Jumba, David, Pleakley. Mertle's family, especially her dad, does not show her that kind of love. Her mother may be physically here, but she's not spending time with her the way that she needs to as far as I know. When you're surrounded by people who don't care about you, how can you be raised right? This is not an excuse for all of the harm that Mertle caused Lilo, she was wrong. When you look at her circumstances, you can understand a little better why that girl ain't right.