You can't tell whether the driver is a legitimate holder of a Blue Badge, but the issuing Council (
Southwark) will be able to do so.
The incidence of fraud by people who are not entitled to the Blue Badge is very great. The value of the fraud consists of the saving in money, and in time and convenience, and exemption from congestion charging which involves a cost to the taxpayer in terms of lost revenue. This will often amount to many thousands of pounds.
Most Councils - certainly in London, where rules are tighter than in other parts of the UK -
take this fraud seriously.
You should report your concerns to Southwark Council Disability services on 020 7525 2141/ 2306 as they issued the badge - there will be a visible reference number. They will be able to check with the person to whom it was issued. If it was issued to somebody else that may be enough to stop any abuse of the badge. If the badge was stolen or forged they will ask the police to investigate.
You certainly shouldn't confront her, and there's no need to do so. Many people have a disability that is not apparent to others. If the driver is the legitimate holder then she will already be aware of the rules and probably not surprised that someone noticed. She will recognise that it is in everyone's interest that people who steal from or defraud others are deterred from doing so.
I don't agree with people who think this is a trivial issue, or that people who complain about suspected fraud are overly officious.This kind of fraud devalues the Blue Badge scheme and disadvantages disabled people and it's completely reasonable to take action to stop it.