Our ATM, Foreign Card, Who Handles Claim?

Answer by Andy Zavoina:
It isn't a Reg. E issue on your part, in my opinion. But they received a Reg. E disclosure from their card issuer, the depository bank, which told them to notify that bank when there is a dispute.

While you will be involved in the resolution process, you do not initiate it. That bank could have a policy to automatically pay small claims instead of conducting a costly investigation. They may discuss it with the customer and determine that another card did the transaction. There are many possibilities. But they start with the depository bank.