We have a situation at our institution and need some feedback. We have a customer that made a mobile deposit with no endorsement back in May 2019. They then deposited the physical at another institution in July 2019. Now the paying bank is requesting that we provide them funds for the deposit since we were the bank of first deposit without the restrict mobile endorsement. What is the return timeframe for a duplicate check deposit?

The fact that your bank failed to require that the mobile-deposited check carry a restrictive indorsement "Mobile deposit only" isn't something that the paying bank should care about. That indorsement is meant to protect your bank from an indemnity claim from a bank taking the physical check if it sustains a loss due to the check being returned unpaid for duplicate payment to them (and their being unable to collect from their depositor). Ordinarily, you would expect the unpaid check to have been returned to the bank that took it in July.

If your image and the original check were both handled by the Fed on the way to the paying bank, the paying back can use a PAID check adjustment for EITHER of the items if the adjustment request is received by the Fed within 6 months of the cash letter date for the item.

I'm guessing that the paying bank didn't get the check(s) from the Fed, and is therefore trying to go directly to your bank to get reimbursed. Perhaps it feels you're the easier target to pursue, or perhaps it's going after both banks and praying one will blink.

Since the check isn't coming back to you via the Fed, you can argue with the paying bank that you took the check first (albeit only an image) and you don't feel you're responsible for the duplicate presentment. Just be aware, though, that if the July bank ends up holding the bag and can't recover from its customer, it can make an indemnity claim on your bank under Reg CC § 229.34(f).