Jim -

As a printer, I can answer this one, as it is a subject that all printers face.

Unless he has licensed those images from both the people pictured (or their estates) AND obtained the license from the photographer, he is most likely breaking copyright law. The only generally allowed exceptions are news-related publications/articles (magazines, newspapers, websites, etc.) and those who are in the public domain (such as politicians). We regularly have to get signed clearances from our customers before we print their card.