File/folder owner on external drives has no effect

I have two external SSDs formatted as APFS (Encrypted). I have folders set up for different users on them, and I had set permissions for them accordingly (the user with read/write to their own folder, removed Staff, and Everyone has no access). However, I find that I can enter other users' folders with no problem, and it looks like I'm the folder owner even though I'm not. In fact, for anything on the external volumes, the folder owner appears to be whomever is currently logged in. In other words, if User1 is logged in and checks their folder, they will see themselves as the owner. If User2 logs in and checks the same folder, they will see User2 as the owner of User1's folder and can navigate it as though they were the real owner. This behavior is visible whether checking from the Finder or from the terminal.

I've tried changing the owner via both the Finder and the terminal ("sudo chown <user> <folder>"), but this has no effect. Strangely, changing other properties does work. For example, "sudo chmod 700 <folder>" will change the folder permissions correctly.

As a test, I also inserted a flash drive and formatted it as HPFS+ (Journaled). The same behavior occurs there.

This behavior does not occur on the internal SSD.

This is on an M2 Mac mini running Ventura 13.4.

Has anyone come across this?