> Who pays for this?

Initially, the user requesting the hearing (this discourages the scammers).

When the appeal is won, the company (this encourages doing a really good job at not banning legit users and enabling lower-friction ways for them to appeal).

> You are suggesting we socialize the cost of private customer service disputes.

No, it can just be a dedicated body, funded as described above. Yes, this might mean that free accounts cease to exist, although I suspect in practice it would just result in a fraction of the profit from free accounts going into better (less user-hostile) abuse management rather than profit.