I would guess (and it is only a guess) that it isn't at all okay. Look up "moral rights on the internet".
I should think most terms on the micros also forbid it.
Plus the company could be in a dodgy legal position in some countries for false advertising.

I person in question is not located in the same country.
When I contacted the person, the reply was in short:

"I bought the images at Veer, and this is a legit use. Other photographers use stock in their portfolio all the time" At least I paid for them."

I have tried to read the licensing terms, but cannot find anything about such use. I am not a lawyer and English is not my first language so I might be missing something in the legal text that the agencies use.

Contact Veer and let them know!

I'm dying to find out if a photographer can hang other photographer's images in his studio "just because he paid for them" making it look like they are his work.

I would be steaming!

Wait and see what Veer tells you about this.

Legal or not, this is BS. Most people walking into a photo studio don't expect photos on the wall of another photographer than the one they are about to hire.

This is just blatantly taking advantage of people and quite insulting. Very bad business practice.

However, what you could do is go to to review web sites like Yelp, yahoo, Google etc. and leave raving reviews about a particular photograph in his showroom that you were blown away by until you realized "WOW, I took that shot" and post a link to your portfolio online.

I would think this is a catch all for using images in any unsavory way...

Sensitive Subjects: use the Content in a fashion that is considered by Veer in its sole but reasonable discretion, or under applicable law, may be considered pornographic, obscene, immoral, infringing, defamatory or libelous in nature, or that would be reasonably likely to bring any person or property reflected in the Content into disrepute

This becomes less of a copyright issue and more of a willful misrepresentation issue, and it happens all the time.

http://www.petapixel.com/2010/09/15/photographer-offers-groupon-deal-using-stolen-photographs-chaos-ensures/

In the US, my first stop would be the Better Business Bureau for their area. Unfortunately, stock agency terms do not explicitly prohibit this kind of use. It's wrong, but one would think that such unethical usage would be understood by a business. Looks like it's not here.

Save your money on the lawyers unless they are a big fish and actually worth pursuing. Take screenshots of your image in use. Also take a screenshot of their copyright notice or anything that might relate to claims of it being their own work. Send a takedown request. Set a time limit in the request. If the images are not removed, post the business link and your stock link EVERYWHERE, especially on sites that are big in local commerce where the photographer does business. Avoid personal commentary, just state the facts. Avoid the phrase "stolen images", since technically he did not steal, he said he licensed them. Better to use terms like Misrepresentation or False Advertising.

Send to your local news agent too. They may not even care, but if it is a slow news day, the news agents these days have published less important things. Also if the photog is using advertisers to gain revenue for their site, contact them too. This will put the screws to them better than any claim of copyright infringement.

Edit: My error in not thinking - when making your statement make it Misleading Advertising, not False Advertising. And BTW, if you go to that Dana Dawes photography site, looks like it is now out of biz and the site owner may now be attempting/planning to monetize by writing about stuff like auto parts and restaurant supplies.

As another example, hair salons have pictures all over their walls of models whose hair they did not style.  This is kind of the same thing.  

I'm not sure that's a good example, Lisa. In that case, those photos are there to serve a purpose ("oh, hey, that looks nice, can you do something like that?") rather than any pretense that they did that work.

Perhaps a better example are some websites I've found with one of my photos of a particularly well-maintained home being used as samples of "Our work" for a construction company (nope) and a lawn & care business (again, nope).  Complete fabrication and deliberate mis-representation. But I'm sure it goes on all the time.

Deja vu (2010) all over again it seems!

http://www.pcworld.com/article/205632/groupon_pwned_by_photographer_using_stolen_images_for_promo.html

Whats funny to me is that if you're going to fraud your way into a profession, why pick photography?  Pay is low and clients are guaranteed to find out you're not what you cracked yourself up to be.

Here's a link to a similar story:

http://www.amateurphotographer.co.uk/news/Photographer_in_copyright_scandal_strikes_again_update_news_311436.html

what you describe is a classic case of copyright infringement. another person is taking your work and presenting it as his own. clients like the work you did, but they are hiring someone else. this is what copyright laws are designed to prevent.