The best practice is to follow the regulatory investigation requirements in 1005.11. This means that if you require/receive the dispute in writing, you must provide provisional credit within 10 business days and resolve the claim within 45 days (90 days if it is a new account or the withdrawal took place in a foreign country.)
You can choose to a) Take the customer at their word and pay the claim and take a loss or b) initiate a chargeback to the owner of the ATM stating that the cardholder did not receive the cash for the disputed withdrawal. The ATM owner will either accept liability or provide documentation to you that the cash dispensed correctly allowing you to deny the claim.
Added comment from John Burnett: There is one other option: Decide to take the customer's word for the error and make the adjustment to the customer's account, and then pursue a recovery through the applicable ATM network procedure. You might take this option if the amount of the alleged error is relatively small, for example.