What exactly does the "fraud management system" of blockchain checks? Basically, we are webhosting company and accepting payments through Paypal and 2checkout currently.  Due to risk of service being used for spamming,we manually review orders after payment gateway verifies payment and card owner identity. Likewise, 2checkout verifies payer's identity and history of fraud/stolen card associated with it than mark payment as verified.

We want to start accepting bitcoin but as per my initial research I am afraid with the risk of misuse of service.I know the bitcoin's main advantage is that you don't need to provide any identification which is stopping me to add it as payment gateway.

As far as i researched, blockchain verifies transactions on the basis of # number of confirmations which is correct to legitimate the payment. I believe this verifies the source of bitcion and spendability of it.

Question : are there any other aspects in blockchain's "fraud management system" which can assure merchants that payer is legit?
Bitcoin is focused on assuring that the payment is legit.  It doesn't help at all with the payer.

Waiting for confirmations gives you very strong assurance that the payment is genuine and final, and that neither the payer nor any outside authority can do anything to reverse it.  The money is yours, full stop.  There are no chargebacks.

However, you don't get any verification of the payer's identity.  There are no names attached to Bitcoins, only addresses which are effectively anonymous.  (Theoretically there are ways one can try to trace a Bitcoin address back to the person who holds it, but it's unlikely that you'll want to devote the necessary time and resources, and you chances of success are still pretty slim.)

So if someone pays you in Bitcoin for an account which they then use to spam, you can cancel their account and keep their money, but you have basically no other recourse.  You probably won't be able to find them to send nasty letters or pursue legal action or call the police.

Of course, along the lines of "keep their money", you could require Bitcoin customers to put down a large deposit, which you keep if they abuse your system.  However, this could discourage legitimate customers, who now just have to trust that you will return their deposit as promised if they behave; by the same token as above, they have very little recourse if you don't.