Create an sftp user and restrict to specific folder.

restricted-ftp-user.sh

#1. Create the sftp group
sudo groupadd sftpusers

#2. Comment out the default "Subsystems sftp" in the ssh config
sudo sed -i "s/Subsystem sftp \/usr\/lib\/openssh\/sftp-server/#Subsystem sftp \/usr\/lib\/openssh\/sftp-server/" /etc/ssh/sshd_config

#3. Modify the ssh config
sudo vi /etc/ssh/sshd_config

#Add the these lines to the end of the file
#enable sftp
Subsystem sftp internal-sftp

Match Group sftpusers
   ChrootDirectory %h #set the home directory
   ForceCommand internal-sftp
   X11Forwarding no
   AllowTCPForwarding no
   PasswordAuthentication yes

#4. Restart the ssh service
sudo service ssh restart

#5. Creating the user
#create user
sudo adduser sftpuser1

# prevent ssh login & assign SFTP group
sudo usermod -g sftpusers sftpuser1
sudo usermod -s /bin/nologin sftpuser1

# chroot user (so they only see their directory after login)
sudo chown root:sftpuser1 /home/sftpuser1
sudo chmod 755 /home/sftpuser1

sudo mkdir /home/sftpuser1/uploads
sudo chown sftpuser1:sftpuser1 /home/sftpuser1/uploads
sudo chmod 755 /home/sftpuser1/uploads