Password & Group Files Question

I should probably know this info but I seem to be having a brain-fade day today.

When a new hosting customer is created their ID and PW are added to the .htpasswd and a new group is created for them and added to the group file.

Question 1: Are these the files that are used to authenticate the customer when they are using FTP or is there some other file (ie: a .ftppasswd) somewhere?

Question 2: If a customer has a .htpasswd file in their /home/user directory, is that file ever used or does Linux always refer to the server wide .htpasswd file?

Thanks in advance.

 

 

 

 

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