storekit doesn't recognize test user

Titanium Studio 3.2.3 IOS 7 Storekit 3

The only reference I find in storekit that talks about sandbox is this:

Storekit.receiptVerificationSandbox = (Ti.App.deployType !== 'development');

but I think this is entirely for receipt verification and not for 'sandboxing' the actual purchase. And am guessing receipt verification is also optional? Below this line there is also this:

var verifyingReceipts = false;

which sets receipts verification to false, I would assume.

I have setup a test user and an in-app purchase. The connection to apple is successful as it was able to pull down the formatted price and the title. But when I entered test user details to purchase there is an error saying

The apple id you entered couldn't be found..."

Also, I was expecting storekit to display a text saying it's in a sandbox mode but I'm seeing nothing of this sort.