The photo of French boy Grégory, who was killed in a notorious murder at the age of four in 1984, was used to advertise the festival's own “kindergarden” in its daily publication, Montreux Jazz Chronicle, on Saturday.
The murder of the child, who was found in a river in the Vosges region of France after his parents received anonymous threatening letters, has never been solved.
Thierry Moser, a lawyer for the parents of the murdered boy, said they were outraged by what happened.
Moser had demanded an initially apology but on Wednesday announced that the parents are considering suing the festival's organisers.
"We intend to sue for compensation for the damage that has been caused," Moser told local TV station France 3 Lorrainen, before later telling told Europe 1 that the parents had received a letter of apology from the festival and that they were still considering their options.
"The letter has made a good impression, but I do not want to prejudge the decision still to be taken by Christine and Jean-Marie Villemin," he added.
Contacted by Le Huffington Post, the French-language online news site on Tuesday, Mathieu Jaton, managing director of the Swiss music festival, said the embarrassing use of the photo was a regrettable “human error”.
The image was downloaded by a “very young person who did not know of the [murder] case,” Jaton said.
He emphasized that it was not a “bad joke” but rather a convergence of “stupid circumstances”.
Festival chief Jaton said the error was noticed too late to change the paper version of the Montreux Jazz Chronicle but the electronic version was immediately modified.
The editor of the Montreux Jazz Chronicle, who did not spot the blunder in time, has also taken his shared of responsibility, a spokesman for the festival told Europe1 radio. Copies of the newspaper were immediately withdrawn from circulation after they realised the error, the spokesman added.
Gregory's parents and their lawyer have rejected the explanation.
"The argument that the error was committed by a young beginner is pitiful," lawyer Moser said.
"The mistake is absolutely inexcusable and we believe it was a stunt organized by the festival. (...) There is no excuse that is acceptable," the lawyer added.
The Montreux Jazz Festival, one of Switzerland's best known summer music festivals, held in the lakeside town overlooking Lake Geneva, runs until July 20th.
A version of this article first appeared in The Local Switzerland on July 17th.