I spend all day every day with twenty 3 and four year old. I hear all day, "mommy says I don't have to eat that." "Mommy says i shouldn't do something if it doesn't make me happy". "mommy says that I can read during nap time" "mommy says I can have two cupcakes".

My only response, ever "Mommy can tell you to do what ever she wants at home; but at school Texstep is in charge. When mommy shows up, then you can listen to her. Until then its my rules."

As far as my SS3 goes, I've never had a problem with him saying mean things to me. I am lucky in that aspect-- BM knows DH would shut it down so fast, she has never said anything mean about me or DH to SS. At least not that he's ever parroted back to us.

Three year olds can be terrible on your emotions. They are just getting to have full vocabularies, and don't really understand the consequences of saying mean things yet. They just know that in that moment, they want to hurt your feelings. My advice when she says "mommy says you don't really love me", discuss with her things that you do for her and ask "would I do X with you if i didn't love you?". As far as the house thing, just tell her "nope. This is MINE AND DADDY'S house, and your house. It's not just Daddy's, because we all live here."

I think that considering bm is a crazy bitch, this little girl is quite well adjusted, you have made a real effort with her, I to love to do crafty thing with my sd6, plus picnics, bike rides and walks, her mothers idea of a day out is to go shopping, I think you are doing everything right, with time she will appreciate all the effort you have made with her and sadly will realise what her mother is like, this little girl needs a positive female influence in her life and thats you, you know kids are known for their lack of sensitivity, they don't have a filter, your sd is confused, who would'nt be with the bm's crazy behavior. This little girl is lucky to have you, as for dealing with her, you have already said the right thing, when I am watching you, you will do as I say, for the card business, I am paying so I will decide which row of cards you may choose from, or not at all.

I would punish SD for saying mean things, ex. sit in corner, no dessert - nothing serious, just a consequence.

She is not forced to say those things because her mom told her to - she is still the one deciding to let it come out of her mouth.

So give her a reason to think, maybe it is not worth it to say this, as I am the one who will be punished and not my mom.

BM 101 imo! do this to your child and you will be hurting your own child, you dumb b*tch! oops sorry but really

It's usually pretty easy to tell the difference between what a 3 year old thinks up to say and what s/he's parroting from an adult.

To be a successful step parent you're going to receive a lot of heartbreak. It's impossible to counter act what someone is saying to a day when she lives with them half the time and of course the kid will pick and choose what's in the kids best interest to say.

I don't think you're ready to take the rest of my advise but I want you to be aware of 'disengaging' so when the time comes you'll know there is a road you can follow.

I wrote this a long time ago and I hope this helps with your problem. It may not reflect your exact situation but you'll get the idea:
The situation with my step-kids finally got to the point where I decided that my efforts to raise them was futile.
First I told my wife in private what I was going to do and why.
Then I stopped investing myself, time and money in their upbringing. I realized that by conscious choice I could cease being responsible for them or their actions. Neither would I take credit for how they turned out, good or bad. I simply stopped interfering in their lives. This is not to say if they would start a fire on the living room floor I would not intervene. But if they did not do the laundry as scheduled I ignored it. Nor did I do any of their chores. If the trash overflowed in the kitchen - well tough. Mom dealt with it when she got home.
You will be absolutely amazed at the look on a kids face when s/he realizes you don't care enough to even tell their bio-parent they did something wrong. And you'll be amazed at their future behavoir and attitude towards you.
I stayed friendly enough and taught one how to drive when she was old enough. But they could no longer blame me for the consequences of misbehaving just because I saw the misbehavoir. I never told. If they were caught in a infraction it was not my fault. They began to realize that they were responsible for their actions because of what they did not because I caught them.
I would talk to my wife in private if I had issues, but once she made the decision I backed her up 100%.
Once the kids realized I was no longer the ogre they thought I was their attitude changed. I was not their friend, but neither was I the enemy. They came to realize that I had not done those things to irritate them. They in fact missed the things that they had come to depend on me doing. Permission to go to the mall when their Mom was not home? "Sorry, can't do that".
Their mother slowly came to realize that I wasn't overreacting to their actions. In fact I wasn't reacting at all. She came to understand that she would have to control the situation and she did.
With that things got much easier around the house.
Billions of kids grew up in the world without help from me and turned out just fine.

First, disconnect your "feelings." She is a confused child, you are the adult. All children including your own will say things that are hurtful or wrong or whatever.
Good advice above on correcting her, calmly and with authority. Be the rock in her life, not on her level.
I recommend getting books, both on fighting effects of divorce and parenting a 3 year old.