Is there maybe an example of a storefront where you can upload and sell your things to the public, but block individual customers? Just curious, because you called it a basic privacy and protection service. Selling to the public usually entails selling to anyone that pays, not anyone that pays minus some people.
If you have reason to believe and maybe proof, that someone abuses Itch, you should contact support. Should they agree, they might do more, than just ban the account from buying your projects. Especially, if the account should abuse refunds.