If a customer does not receive funds from an ATM and waits past sixty days of the mailing of the customers periodic statement to dispute the withdrawals, is an investigation necessary or can we decline the claim since the notice was untimely?

You could certainly decline their claim based on it being made after the time allowed for disputes under Reg E, but there might be a couple of other considerations, such as customer/community relations. Not knowing the size of your institution or your community, that is something that you would have to take into account.

I'm not sure you can deny the claim. I believe you are not subject to 205.11, error resolution procedures, including time frames for investigation and provisional credit, since the claim was not timely, but I think the customer's liability is still limited by 205.6.

Actually, §205.6 deals only with unauthorized EFTs. Once the 60-day clock in §205.11 has run, I believe that the customer owns the problem.

I do not think that one can classify a failure to dispense (or a short dispense) as unauthorized.