When To Cut Your Child's Ties to a Friend

This is what you call crowdsource parenting.

My teenage daughter has been friends with this other girl since she can remember. I think they met in Kindergarten. Nice kid. And by "nice kid" I mean that I've never seen her be mean to anyone on purpose. And being a parent of four girls, I've met many girls whom I couldn't say the same thing about.

However... (you knew it was coming, right?) the last three years or so her language has become coarser. My daughter or I will typically point it out politely and she always apologizes. And I can tell she means it. Also her manner of dress has become a bit more... revealing. She talks a lot about getting tattoos and multiple piercings.

To be fair, the girl doesn't have a great home life. She has said in the past that hanging out with our family is like an episode of Full House. And like I said, she's not a mean kid. But my wife and I talked about it and we thought that maybe our daughter could be a good influence. But more recently, my daughter told me that her friend had stolen a few things from a gift shop when they were together. My daughter urged her to give them back but she refused, saying that she'd actually bought one and the store was making an obscene profit so that it was ok to take two more. My daughter brought this up to me, very upset.

So the question is, what to do? At what point am I harming my daughter by allowing her to maintain a close friendship with this girl? Do I talk to the parents even though I'm pretty sure they wouldn't see anything wrong with what she's doing? I already don't let my daughter go over their house. She only comes over ours. My instinct is obviously to cut ties because my first responsibility is to the safety and well being of my daughter.

I'm pretty sure some of you must have dealt with similar situations. I'd love to hear your thoughts.