Blacklisted iPhone ???

Blacklisted Iphone? Or blocked iphone??? Need answers ASAP

I recently bought a pre owned iPhone XS Max from a online store that sells used electronic. They are extremely popular and upon doing research I found that they were the most reliable. They emailed today saying that the someone had reported the phone stolen and that they were going to “block” the phone from being used. I tired to explain to them that I have the phone and they told me they see that the phones been activated and that to be on the safe side they are going to block the phone. I’m not sure what to do and I don’t understand how they can “block” a phone when they aren’t a carrier! Like i don’t even know what they mean by blocking... I’m assuming they mean it’s being blacklisted. Please help me if you have any answers or even understand what I’m talking about. And it’s weird that they can see that the phones been activated. They aren’t a carrier and they won’t refund me. I’m getting my SIM card today and they won’t refund me. How can they block a unlocked phone that isn’t even registered to a carrier yet. They literally just are supposed to sell the phone