Low-cost attracts more fraudulent customers, using stolen credit card numbers. Hosting is particularly bad for this compared with other low-cost services, because of the community of people who want to use rented servers for DDOS and such, ideally without paying or being tied to a real identity.
It also attracts people who will do a card chargeback if the server isn't what they wanted or after they've used it for some temporary event. Some people don't appreciate that chargebacks are expensive for the low-cost supplier, and some people don't care.
Low-cost also means the penalty cost of credit card chargebacks is a higher proportion of income, even if the number of them was the same. It might be so much higher that the business couldn't be profitable at the prices it offers if it didn't aggressively filter which customers it takes on.