AWS - Setup FTP User to Upload Files

I have set up an EC2 server on AWS.  All I want to use this server for is uploading files as a backup.

So I want to create one external FTP user.  Here's the steps I've taken so far.  

1. Create a Security Group and restrict IP Ports to 1) Local Machine (for testing) and 2) Remote MT Server
2. Create an EC2 Instance  (Ubuntu Server 14.04 LTS (HVM), SSD Volume Type (ami-5189a661)
3. Associate or copy security group to this Instance
4. Login via SSH to the server
5. Once logged in do an "su" to change to root user
6. run apt-get update
7. Create a directory called "/backup"
8. Created a user and assigned to that directory.  useradd  -d /backup mynewuser
9. passwd mynewuser

When I attempt to login as that user, I can never get connected.
I get a message that says, "Connection attempt failed with "ECONNREFUSED - Connection refused by server". or Error: Could not connect to server

Any ideas on what I've done wrong?

Thanks.