Image from Gothic Manor
This is an old folktale retold by S.E. Schlosser in Spooky Pennsylvania. This particular version's setting is mid-state, but it's lore that has its' roots everywhere.
Bloody Mary was an old crone that lived deep in the woods making her living selling herbal cures to the locals. None dared cross her, as she was supposed to be adept at dealing out curses also. The townspeople thought she was a witch.
The village's young girls began to disappear, one at a time. The folk searched the woods, the buildings, the streams and everywhere they could think of with no luck. They even screwed up the courage to see if Bloody Mary knew what happened to children. She denied any knowledge of the missing girls, but the villagers were suspicious. Bloody Mary looked younger to them.
One night, the miller's daughter got up from bed and left the house. Her mother and father tried to stop her, but she tore out of their grasp and headed into the woods. Their struggle awoke the town, and the people all followed the girl.
She made a beeline towards a light in the forest. At the end of the light was Bloody Mary, pointing a bright wand towards the girl to draw her to the spot. The townsfolk set on her, and one farmer had a gun loaded with silver bullets. (Farmers were ready for anything back in the day.) He fired one into the witch and they carried her back to town, where they put up a stake and burned her.
As she sizzled, she spat out a curse. If anyone mentioned her name while looking in a mirror, she would come back and claim their soul. Wouldn't you know that some people actually tried that? And true to her word, Bloody Mary sprang from the mirror, tore their bodies apart and laid claim to their souls - forever. They are trapped in the mirror for the rest of eternity with her.