There are rules in Hollywood that they can’t use an actors likeness without permission, but obviously the people who made this ad don’t care about that. I think this is an area the law doesn’t cover yet, although it should.
Although using fake Shemps was somewhat common throughout the 20th century, Screen Actors Guild contracts ban reproducing an actor’s likeness unless the original actor gave permission to do so, largely because of a lawsuit filed by Crispin Glover — following his replacement by Jeffrey Weissman in Back to the Future Part II — that determined that the method violates the original actor’s personality rights. The method continues to be used in cases, such as Shemp’s, where the original actor is deceased and permission from the deceased actor’s estate is granted.