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It is correct, but you've misinterpreted it. As I understand it, they are trying to limit the capabilities of the www-data user! (compare it with the "Single user" scenario above). They want r-x permissions for the www-data user, and rwx permissions for the developers, who will be in the dev-fabrikam group. So the permissions function exactly as they want them to.
Sorry, forgot to update the thread. The issue was solved with a reboot. Very embarrassing. That's now SOP when I'm considering a post. I was really confounded by why 570 didn't work. However, I did learn one interesting thing: setuid is ignored in linux, in case you were wondering.
Huh?? I beg to differ, unless you mean on scripts (eg .sh, pl etc), in which case you are correct
On directories, the setuid permission is ignored, but setguid can be used. I learned it from the Wikipedia article and then I tested on my own system and it is correct. Files created in Linux are always owned by the creator, except possibly under ACL, which I don't know anything about.
I was just thinking about that prior to reading the whole discussion on the group being limited to the permissions of the file owner. If you recently added a user to a group, you usually need to log out and log back in as that user. A reboot would do the same thing. I'm not sure if there is a simpler way of having group changes take effect but simply logging in again should do it.