Players become Steve sometimes on LAN

Steps to reproduce:

1. Join a LAN server
2. notice that at first other player(s) ARE NOT Steve....
3. WAIT A BIT.... stay away from each other for awhile
4. after maybe a few minutes "regroup"
5. Issue occurs....

Expected Results:

Other player(s) look like their respective Custom Character.

 

Observed Results:

after awhile, other player(s) turn into STEVE, with a pancape equipped occasionally.