Can Your Business Use AI-Generated People In Advertising?

So, it’s time to get your business’s marketing sorted. Instead of organising a photoshoot, hiring a photographer, getting release forms signed and dealing with everything else that comes with creating new advertising content, you’ve decided to use AI.

You’ve probably seen other businesses doing the same. AI-generated people can look surprisingly realistic, and creating an image can be much quicker and cheaper than organising a traditional photoshoot. So, why not?

Businesses can generally use AI-generated people in advertising, but AI-generated does not mean risk-free or rights-free.

Before publishing an image, you still need to think about where it came from, whether you have permission to use any existing material or real people involved, what your AI provider allows and what customers are likely to take away from the finished ad.

What Counts As An AI-Generated Person?

An AI-generated person is not always someone created completely from scratch.

You might type a prompt into an AI tool and generate a fictional person who was not intentionally based on anyone real.

However, you might also upload an existing photograph and ask the tool to change a person’s clothing, put them in another environment or create a series of new images from the original.

AI can also recreate or closely imitate the appearance of an identifiable real person.

The more your AI content relies on an existing image or identifiable real person, the more important it becomes to check the rights and permissions behind it.

Does AI-Generated Mean Copyright-Free?

No. AI-generated does not automatically mean copyright-free.

If your business uploads an existing photograph, artwork or other material into an AI tool, first work out whether you have permission to use that material in this way.

Having a copy of an image is not the same as owning copyright in it.

If your business received the image under a licence, check whether the licence covers modification, commercial advertising and AI-assisted use.

Permission to use a photograph for one purpose does not necessarily give your business an unlimited right to create new versions of it.

The finished output can also create copyright issues.

If an AI-generated image reproduces a substantial part of somebody else’s protected work, the fact that AI created the output does not necessarily make the issue disappear.

If the rights are unclear, a Copyright Consult can help you work out what your business can use or modify.

What About Copyrighted Material Used To Train AI?

This is still developing in New Zealand.

MBIE’s copyright and GenAI update acknowledges that generative AI raises complex copyright questions and that countries are taking different approaches.

In August 2026, MBIE confirmed that Cabinet had asked the Minister of Commerce and Consumer Affairs to report back by 31 March 2027 on a possible copyright framework for generative AI in New Zealand.

That does not mean every image produced by a generative AI tool infringes copyright.

For businesses actually using these tools, the more immediate questions are usually: what did you upload, what rights did you have over it, what do the platform terms say and what does the finished output reproduce?

Can Your Business Own The AI-Generated Image?

New Zealand already has specific provisions in its Copyright Act dealing with computer-generated works.

The Copyright Act 1994 defines a computer-generated work as one generated by computer in circumstances where there is no human author. For literary, dramatic, musical and artistic computer-generated works, the person who undertakes the arrangements necessary for creating the work is treated as the author.

The Act also provides a 50-year copyright term for qualifying computer-generated works, running from the end of the calendar year in which the work was made.

However, generative AI is developing much faster than the legislation that originally introduced these concepts, and the Government is actively considering what a future copyright framework for GenAI should look like.

So, if an AI-generated character or campaign is going to become a valuable business asset, it is still sensible to check the AI provider’s terms and make sure you understand what rights you can actually exercise over the output.

What Do The AI Tool’s Terms Let You Do?

Check the tool’s terms before turning an AI image into a commercial campaign.

Different AI providers may take different positions on:

• commercial use
• uploaded photographs
• generated outputs
• real-person likenesses
• retaining inputs
• training on your content
• responsibility for third-party claims.

A platform giving you permission to use an image commercially does not necessarily mean it has guaranteed that nobody else’s copyright, privacy or other rights are involved.

If the terms are unclear, a Contract Review can help clarify what the platform is actually allowing.

If employees are regularly generating content using AI, an Employee AI Use Policy can also create practical rules around approved tools, confidential information, personal information, ownership and review before publication.

What If The AI Person Is Based On Someone Real?

If you can identify the real person behind an AI-generated image, think about privacy and consent before using it in advertising.

Imagine a customer sends your business a photograph and agrees that you can repost it on Instagram.

That does not necessarily mean you should upload the photo to an AI platform, create new synthetic images of that customer and run them in paid advertisements.

New Zealand’s Privacy Commissioner’s guidance on AI and the Information Privacy Principles explains that the Privacy Act 2020 applies when businesses and organisations use AI tools to collect, use or share personal information.

The Privacy Commissioner recommends carrying out a Privacy Impact Assessment before using AI involving personal information and updating that assessment as the use develops.

The safest approach is to get permission for the use you actually intend to make.

If your business intends to create AI-generated versions of employees, models, customers or creators, a suitable Talent Release Form can address usage rights, approvals and future reuse.

If the AI workflow forms part of how your business collects or handles personal information, your Privacy Policy should also accurately reflect your actual data practices.

Depending on the use, it may also be worth carrying out a Privacy Impact Assessment rather than waiting until an issue arises.

Can An AI-Generated Person Give A Testimonial Or Endorse A Product?

Do not invent a customer experience or endorsement and present it as genuine.

There is a difference between an AI-generated person modelling a jacket and that person saying:

“I bought this jacket six months ago and it’s the best one I’ve ever owned.”

The second statement suggests a genuine customer experience that never occurred.

Under the Fair Trading Act, businesses must not make false or misleading representations.

The Commerce Commission’s guidance on endorsements and advertising claims says endorsement claims must be true, the person or organisation must agree that the business can make the claim, and businesses should only claim that someone uses a product if they actually do.

So, an AI-generated presenter can potentially communicate accurate information about your product.

What you should avoid is using AI to manufacture the appearance of genuine customer experience, support or expertise where none exists.

Can The AI Image Misrepresent Your Product?

Yes. A picture can create a misleading impression even where the wording is technically accurate.

For example, AI might:

• make clothing look as though it fits differently
• exaggerate a beauty product’s results
• create an artificial before-and-after comparison
• show a product doing something it cannot do
• depict a fictional customer achieving an unsupported result.

The Commerce Commission’s advertising guidance makes clear that the overall impression created by an advertisement matters. This can include the imagery and presentation used, not just the words.

The Commission also warns that fine print cannot correct an overall misleading impression.

So, before publishing an AI-generated campaign, compare the image with the real product.

If the AI has altered what customers are likely to think the product looks like or can achieve, fix the creative itself rather than relying on a disclaimer.

Do You Have To Disclose That The Person Is AI-Generated?

New Zealand does not currently have one general AI-specific rule requiring every AI-generated advertising image to carry an “AI-generated” label.

However, existing laws still matter.

The Privacy Commissioner’s guidance on generative AI says businesses should be transparent where generative AI is used in a way likely to affect customers or clients and their personal information, including explaining how, when and why AI is being used where relevant.

The Fair Trading Act can also become relevant if the lack of disclosure contributes to a misleading overall impression.

So, instead of asking only:

“Is there a law telling us to put a label here?”

also ask:

“Would the customer understand this ad differently if they knew the person was synthetic?”

If the answer is yes, disclosure may be a sensible way to reduce confusion.

But disclosure does not fix everything.

Writing “AI-generated” on an image does not:

• create copyright permission
• give you permission to use a real person’s image
• make a fictional testimonial genuine
• correct an exaggerated product result
• override the platform’s terms.

Disclosure may help with transparency, but it does not create permissions or rights your business did not already have.

What If Your Advertising Is Seen Overseas?

Businesses selling internationally also need to consider the markets their advertisements reach.

The laws that apply in New Zealand are not necessarily the only rules that matter when an advertising campaign is shown overseas.

For example, Article 50 transparency requirements under the European Union’s AI Act began applying on 2 August 2026.

They include obligations around machine-readable marking of certain AI-generated or manipulated content and disclosure where AI is used to create or manipulate content that constitutes a deepfake.

This does not mean every AI-generated image used in Europe simply needs the same visible “AI-generated” label. The requirements depend on the type of content and the role of the business or AI provider.

The European Commission’s Article 50 guidance explains the requirements in more detail.

If your business runs the same campaign across New Zealand and other international markets, do not assume that one compliance check will cover everywhere the advertisement appears.

What Should You Check Before Using An AI Person In An Ad?

Before publishing, ask:

• Is the person completely fictional or identifiable as someone real?
• Did we upload somebody else’s photograph or creative work?
• Do we have the copyright or licence required to modify it?
• Does a real person’s permission cover AI-generated advertising?
• Are we handling personal information through the AI tool?
• Should we conduct a Privacy Impact Assessment?
• Does the tool permit commercial use?
• Could the output reproduce a protected work?
• Do we understand what rights we have in the finished AI image?
• Is the character presented as a real customer, expert or endorser?
• Does the image accurately represent the product?
• Would disclosure make the ad clearer?
• Where will the campaign be shown?

You do not necessarily need legal help every time your business creates an AI image.

However, if a real person is being recreated, third-party content is involved, you are relying on unclear provider terms or a campaign will run across several countries, speaking to a legal expert before publishing can help you identify what permissions or changes are actually needed.

AI may make creating advertising faster. That does not mean the usual rules around copyright, privacy and truthful advertising disappear.

If you would like a consultation on using AI generating people in your business’s advertising, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.