Losing weight in 500 calories is only damaging her metabolism. Anyone would lose weight on that. However what happens with that is her body will start digesting muscle, as well as stored fat, and she will kill her metabolism as it actually needs FOOD to work properly - she will also stop getting her period and begin to lose hair if this is done over an extrended period (the body to sustain itself will begin to cut out all unnecessary functions and limit blood supply to non essential areas (like the scalp) to support its vital organs - once she gets back to eating normally - which she will have to do at some point, she will gain weight faster and keep it on because she's fried her metabolism.

The best way to lose weight is by boosting your metabolism - exercise, with some weights - and eat healthfully... Lots of veggies, and fruits, minimal meat if she's a carnivore - protein from beans and legumes, and steer clear of junk food! and that's my diet advice for the day. have an awesome one.