Hopefully when you set up your business you did it right and retained an IP lawyer who registered trade names, business names, service marks, trademarks and so on. If you did that right, your IP lawyer should be able to force the activity to a stop and maybe even get damages. If you left out that step you have a mess and may have no solution. You'll still need to talk to an IP lawyer with details, but what you did right (or neglected to do) will affect what you can or cannot do.
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The question or request leaves out the "thing" or "condition" that leads to confusion between the two businesses. Are the store/business names similar or the same? What is it that confuses the consumer. The matter of Consumer Confusion is precisely the purpose of Trademarks in not being similar in sight or sound for similar products or services. You need an Intellectual Property attorney with Trademark experience.
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You describe what might amount to commercial disparagement, slander, unfair business practices and possibly trademark infringement. These and other potential causes of action may be sufficient to put a stop to her actions, but further delay may hamper your remedies. A few minutes with an IP/business litigation attorney to discuss your specific facts would be worthwhile.
Best of luck.
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