The controversial call was caught on video. The woman, later identified as Alison Ettel, said that the little girl was "loudly" selling water outside her apartment for hours.
The child's mother, Erin Austin, confronted the caller.
"She comes out and demands the permit for my daughter. She said if we didn't give it to her she'd call the cops," the girl's mother said. "So I said, 'Ok, call the cops.' And she did."
"The lady called the police because I didn't have a permit," said the girl.
"Yeah, um, illegally selling water without a permit," Ettel said.
Ettel told ABC News that she never spoke to the little girl but says her building's security guard first tried to get the girl and her mom to keep the noise down or move, saying she "did phone the police but not to report them" and that she "simply wanted to know if what they were doing was legal."
Austin posted a video on Instagram stories showing her daughter out selling water again.