NTA someone has to parent that kid. I have two toddlers of my own. My sister-in-law has two older kids. We parent them just as much when needed. She should be humiliated. Learn her lesson. She didn’t pay for the lunch nor did she help with the tip. Whatever her motives, she shouldn’t have done it. She was caught and she hated that. Don’t apologize. One, your niece should apologize to you. Two, her parents should apologize for over reacting. I don’t know what a 12 year old would have done with that money but if it was for her parents, I’m sure they were pissed that she was caught. Plus, if the mom is bragging about stealing, your niece probably picked it up and is now trying to be like her mom. It’s sad but she got caught. Next time, I’d call the cops. If she wants to steal things, then so be it. Be the last one out, even if someone “has to use the bathroom” or whatever the case. My husband makes sure either the tip gets to the waitress by handing it to her or waiting for her to pick up the bill/tip.