I have my Ubuntu Server set up so users with the group of sftponly can connect with sftp, but have a shell of /bin/false, and they connect to their home directories. This is working fine with three of the user accounts I have. But I added a new user account today the same way that I added the others and it will not successfully connect.

sftp -vvv user@hostname

debug1: Next authentication method: password
user@hostname's password: 
debug3: packet_send2: adding 48 (len 73 padlen 7 extra_pad 64)
debug2: we sent a password packet, wait for reply
debug1: Authentication succeeded (password).
debug2: fd 5 setting O_NONBLOCK
debug3: fd 6 is O_NONBLOCK
debug1: channel 0: new [client-session]
debug3: ssh_session2_open: channel_new: 0
debug2: channel 0: send open
debug1: Requesting [email protected]
debug1: Entering interactive session.
debug1: channel 0: free: client-session, nchannels 1
debug3: channel 0: status: The following connections are open:
  #0 client-session (t3 r-1 i0/0 o0/0 fd 5/6 cfd -1)

debug3: channel 0: close_fds r 5 w 6 e 7 c -1
debug1: fd 0 clearing O_NONBLOCK
debug3: fd 1 is not O_NONBLOCK
Connection to hostname closed by remote host.
Transferred: sent 2176, received 1848 bytes, in 0.0 seconds
Bytes per second: sent 127453.3, received 108241.6
debug1: Exit status -1
Connection closed

For a successful user: sftp -vvv good_user@hostname

debug1: Next authentication method: password
good_user@hostname's password: 
debug3: packet_send2: adding 48 (len 63 padlen 17 extra_pad 64)
debug2: we sent a password packet, wait for reply
debug1: Authentication succeeded (password).
debug2: fd 5 setting O_NONBLOCK
debug3: fd 6 is O_NONBLOCK
debug1: channel 0: new [client-session]
debug3: ssh_session2_open: channel_new: 0
debug2: channel 0: send open
debug1: Requesting [email protected]
debug1: Entering interactive session.
debug2: callback start
debug2: client_session2_setup: id 0
debug1: Sending subsystem: sftp
debug2: channel 0: request subsystem confirm 1
debug2: fd 3 setting TCP_NODELAY
debug2: callback done
debug2: channel 0: open confirm rwindow 0 rmax 32768
debug2: channel 0: rcvd adjust 2097152
debug2: channel_input_status_confirm: type 99 id 0
debug2: subsystem request accepted on channel 0
debug2: Remote version: 3
debug2: Server supports extension "[email protected]" revision 1
debug2: Server supports extension "[email protected]" revision 2
debug2: Server supports extension "[email protected]" revision 2
debug3: Sent message fd 3 T:16 I:1
debug3: SSH_FXP_REALPATH . -> /
sftp>

I cannot figure out why one user will work and the other wont, I have restart the ssh service after adding the user. I have even removed the user and added them again to be sure I am adding it correctly.