Legal Considerations For Brands and Agencies Working With AI and Virtual Influencers
By Justin M. Jacobson, Esq.
As social media continues to be a dominant form of marketing for companies combined with the increased usage of artificial intelligence (AI) and Generative AI (GenAI) software for promotion and marketing campaigns, the need for proper legal protection and understanding for the brands and companies utilizing AI content and engaging “virtual influencers” grows more important. Brands and the agencies working on their behalf are now using GenAI in a variety of ways, including analyzing potential leads based on specific metrics and demographics, optimizing promotional campaign execution, and creating social media content captions, “ad-reads,” and “copy” for the brand’s marketing campaigns. Additionally, some companies and marketing agencies are also using AI to create new content, including “original” content via “virtual influencers” and other AI-generated personas. Over the last decade, many major brands and agencies have used influencer marketing including hiring “influencers” to promote and market sponsored products to their community using the talent’s social media platforms (i.e., Instagram, TikTok, YouTube, Twitch). However, considering the rising costs of these individuals and potential issues surrounding hiring them, corporations and marketing agencies have explored alternatives to working with human creators to represent their brands and clientele. Consequently, the advancement of AI and GenAI software capabilities enable brands and agencies to use artificially generated creations as brand ambassadors instead of hiring actual, living people. In fact, in some cases, using a “virtual” influencer may cost significantly less than hiring an entertainer or celebrity for a marketing campaign. For example, using a digital avatar does not necessitate potential in-person production costs required for an individual. Besides these funds, a traditional influencer may also require the company to cover additional costs and expenses related to the partnership such as travel and lodging costs, fees for additional deliverables or revisions, and further potential payment for in-person appearances. In addition to the likely cost reductions, digital influencer usage also helps with the potential brand concerns regarding an individual’s public behavior (especially negative activities) and how these actions may impact the sponsoring party’s reputation, especially since the digital avatar is subject to its owner’s programming which can be heavily regulated.
Legal matters for lifestyle, sports wear, and luxury brands and marketing agencies working with virtual, digital, and AI influencers and content creators.
As a result of these factors, there is widespread growth and usage of “virtual” influencers in marketing and promotion across numerous industries and businesses. In fact, several prominent fashion brands have previously used virtual brand ambassadors to market their items. In fact, several prominent fashion brands have previously used virtual brand ambassadors to market their items. For instance, PUMA previously launched a promotional campaign utilizing an AI-generated model “Laila” to promote the company’s apparel line. Similarly, Prada hired a “virtual” influencer described as an “anime Kardashian,” “Lil Miquela” as part of an Instagram marketing campaign. Additionally, brands Versace, Dior, Balenciaga, and Valentino each used “virtual Instagram influencer,” “Noonoouri” promote their company’s apparel (who also released an original song with Warner Music). Consequently, as a result of the potential significant cost reductions combined with the ease in controlling a digital influencer’s “output,” brand and marketing agency usage of AI content and “virtual” influencers continues to grow. In fact, in, 2025, it was reported that an “anthropomorphic, computer-generated sausage,” “Nobody Sausage” charged “$33,880 for a single sponsored Instagram post” signifying the potential income digital personas are earning. Consequently, while this new wave of AI and “virtual” influencers represents an exciting opportunity for traditional and digital marketing agencies and brands, there are numerous legal considerations that companies and individuals working with AI content and “virtual” influencers should be aware of. While there are many legal matters, this article highlights a few crucial legal considerations for brands and creative agencies interested in partnering with “virtual” influencers and using AI-generated works for commercial activities.
GenAI and Virtual and Digital Influencer Copyright, “Right of Publicity”, and “Name, Image, and Likeness” Protection.
First, it is important that companies and brands interested in working with AI and “virtual” influencers are aware of the potential “right of publicity” laws that are applicable to an AI-generated influencer. Specifically, each state has its own regulations and parameters applicable to an individual’s “right of publicity.” However, since AI influencers are not “natural persons,” many existing right of publicity laws do not protect the “name, image, and likeness” or any other identifiable characteristics of an AI-generated influencer. Therefore, both the content entirely created by the AI (which cannot be copyrighted) and a virtual influencer’s AI-generated “likeness” or persona may fall outside the scope of both “right of publicity” and copyright protection if the creation lacks sufficient human authorship. Related to this fact, if a “virtual” influencer contains any identifiable characteristic of a real person, especially a notable or famous one, and that “virtual” influencer is commercially exploited without authorization, the individual or company who commercially exploited the AI influencer containing the damaging material may be legally liable for a violation of the real person’s “right of publicity.” In fact, since artificially generated content is created from and trained on existing works, brands and agencies interested in working with AI or virtual influencers should ensure that their AI avatars are not, even inadvertently, misrepresenting another living individual. Therefore, considering the vast differences in the right of publicity protections available in each state, it crucial that brands and agencies working with “virtual” influencers understand the extent to which these digital influencers are protected by statutory and common law protections, along with the potential exposure associated with using digital influencers that strongly resemble another existing person, especially a celebrity or notable individual.
Another important legal consideration is the copyrightability of the virtual influencer itself, as well as any “outputs” created by these digital avatars. It has been established that the human contributions, if any, to a GenAI “output” may be protected, but that any entirely AI generated material may not. Consequently, while brands and agencies may obtain copyright protection for any human-created aspects of a “virtual” influencer, these companies are unable to receive copyright protection for any purely AI-generated content, including the design elements contained in the AI or “virtual” influencer themself. For example, in the case of the AI influencer, “Laila,” Puma could potentially copyright the digital avatar’s human-written backstory, any videos or promotional materials created by humans that include her likeness, and any original Puma merchandise designs she wears in these promotional materials. However, any purely generated AI works distributed by “Laila” would be ineligible for protection under U.S. copyright law, as these works were not authored by a “human.” Therefore, there is potential for any other individual or company to utilize these GenAI works, as they are not protected by the exclusive rights conferred under U.S. copyright law.
Entertainers, Influencers, and Celebrities Lawsuit for Generative AI and AI generated advertisements using model, talent, influencer, content creator “name, image, and likeness” in AI generated ads.
Similarly, brands and agencies partnering with AI influencers should be aware of the potential for the inclusion of third-party copyrighted material, even unintentionally, into an AI-generated “output” or into the influencer’s design themselves as a result of the AI software’s training on existing information. In fact, if an artificially generated character or a content piece contains protectable aspects of another’s copyrighted work, those infringing aspects could potentially subject the brand or agency to liability for violation of U.S. copyright law. Therefore, brands and marketing agencies working with AI content and virtual influencers should carefully monitor any artificially generated content they distribute as part of their marketing materials, especially for any works created entirely by GenAI software. Moreover, brands or agencies must be aware of and adhere to any contractual restrictions, obligations, and limitations established between the parties to a contract including any applicable “name, image, and likeness” usage rights. For example, if a brand hires an individual to act as a model in an advertisement, any applicable agreement should describe the scope of the company’s usage of the work including as it applies to the model’s “name, image, and likeness.” This consideration is important to ensure that the company or agency does not exceed the scope of any granted rights, which could potentially damage the person featured in AI-generated material and subject the brand or agency to potential liability. In fact, a fashion model that was first utilized by clothing store Rainbow Shops in an advertisement recently filed suit against the company when it later used an AI-generated advertising allegedly featuring the model, which incorporated the “recognizable face, features, and distinctive likeness” of the model combined with “digitally modif[ied] attributes such as hair color, clothing, background, body proportions, and apparent setting.” These actions were undertaken to create a new advertisement which may constitute a new work derived from the model’s protected likeness, purportedly requiring an additional license from the talent for the subsequent use of her “name, image, and likeness.”
Content Creator, Influencers, Entertainers and Talent Using Social Media and Generative AI and AI disclosures on social media posts and sponsored streams.
Additionally, brands and marketing agencies working with “virtual” influencers must also ensure that any distributed content does not mislead the relevant consumers or otherwise violate the Federal Trade Commission (FTC)’s guidelines. Therefore, brands and agencies partnering with virtual influencers must ensure that all promotional materials distributed on the AI influencer’s social media platforms comply with the relevant FTC regulations, including those related to the required disclosures for social media content and the required disclosures associated with AI-generated content. Specifically, the FTC requires that all social media influencers, including digital ones, disclose whenever a “material connection” exists between the poster and a brand, such as a personal, family, employment, or financial one. This fact is true even if the influencer receives free or discounted products from the company or the talent is simply “tagging” a brand in a social media post. Consequently, any brand or agency working with an AI influencer must ensure that all social media disclosures obligations are adhered to for all sponsored posts and streaming including contractually mandating that the hired party incorporate proper disclosure language such as “#ad”,” “Sponsored,” or “Partner.”
Similarly, the FTC also prohibits businesses from creating, purchasing, or otherwise disseminating “fake” or fabricated product reviews or testimonials. The rule specifically targets testimonials that falsely represent that a reviewer used the product or service when they did not. Therefore, any social media post or other product endorsement, including those made by “virtual” influencers, must be truthful and not misleading. Consequently, the FTC statutory regulations require that an individual endorsing a product must have actually used the sponsored item themselves to truthfully provide their first-person “experience” or opinion of the good or service. As a result, any AI generated content must avoid implying or stating that the opinion or information contained in the advertising is based on “personal use” or that the sponsored content is the digital influencer’s personal “views” of the product. Consequently, any branded works that feature digital influencers, containing claims made by a “fictitious” digital avatar would clearly not be truthful as the virtual influencer cannot “use” the sponsored product nor provide “their” opinion on it. In fact, such content would be tantamount to the AI influencer making an unsubstantiated claim and thus, such statements could be considered deceptive advertising under FTC guidelines (exposing the brand and/or agency to potential liability such as fines and penalties).
As AI and virtual influencers have grown in popularity and usage, social media platforms as well as both state and federal regulators have begun to further address the usage of AI by companies as part of the brand’s advertising and marketing efforts. In fact, many popular social media platforms require or otherwise enable a user to disclose and indicate whenever an AI-generated material is present in a social media post, including platforms such as YouTube and Instagram. Similarly, some states have enacted legislation targeting the usage of GenAI and digital influencers in digital and print advertisements. For example, New York passed the “Synthetic Performer Advertising Law” which requires that any advertisement that uses a “synthetic performer” clearly disclose this fact. Under this law, a “synthetic performer” is defined as “a digital asset that is created, reproduced, or modified by computer, using generative artificial intelligence or a software algorithm, that is intended to give the impression that the asset is in an audio, audiovisual, and/or visual performance of a human performer when it is not recognizable as any identifiable natural performer.” Similarly, the “New York State Fashion Workers Act” was also enacted to create new protections for models against “digital replicas” featuring the talent’s likeness created by GenAI software. Specifically, this statute defines “digital replicas” as any “computer-generated or artificial intelligence-enhanced representation of a model’s likeness,” which includes the protected model’s “face, body, or voice.” The New York State Fashion Workers Act requires that companies and agencies obtain prior written consent from a model prior to creating or using the model’s NIL in any AI-generated work. In addition, California has enacted its own “digital replica” laws providing additional protection for a person’s “name, image, and likeness” from the unauthorized digital replicas created by AI, including the “Living Performers Act” and the “Deceased Personalities Act.” In particular, California’s Deceased Personalities Act prohibits the commercial usage and distribution of a “digital replica” featuring a deceased individual without receiving prior consent from the individual’s estate or heirs. These statutes, in addition to others, such as Tennessee’s “Ensuring Likeness, Voice, and Image Security Act” (“ELVIS Act”), represent further examples where states are actively addressing AI-generated replicas in the absence of federal legislation. Therefore, it is prudent that any companies and agencies marketing or operating within these jurisdictions or any other locations that may have enacted any legislation applicable to AI-generated content should ensure that they follow their respective jurisdiction’s laws.
Overall, the expanded usage of AI content and “virtual” influencers by brands and agencies will likely only continue to grow in the future, especially as Artificial Intelligence and Generative Artificial Intelligence software continues to become increasingly ubiquitous in the marketing and operational efforts of organizations. As a result, it is crucial that any company or agency distributing AI generated works or engaging virtual influencers are aware of the applicable state, federal, and social media platform-specific rules to such relationships. Consequently, since this area continues to rapidly evolve, especially in light of the various pending lawsuits and state and federal statutes, communication with qualified legal counsel prior to, and throughout the existence of these types of partnership is prudent to ensure that the brand and agency fully understand the current legal ramifications and limitations of artificially generated content, especially when using digital influencers as brand representatives.
This article is not intended as legal advice, as an attorney specializing in the field should be consulted.
Thanks to Dylan Pozzuoli-Doyle for his assistance in reviewing and researching this article.
© 2026 Justin Jacobson Law, P.C.
