I don't remember the exact error message, but it was along the lines of "Not a Sandbox user account" and this didn't allow one to utilize In-App purchase.
Very annoying, right?
Well I have found a fix for it!
It is actually quite simple.
1. Uninstall the troubled application(s).
2. Open an SSH window to your device (or using iFile from Cydia).
3. Navigate to /private/var/stash/libexec/
4. Here you will see an "installd" file and an "installd.backup" file without the quotes.
5. Rename the "installd" file to "installd.new" without the quotes.
6. Rename the "installd.backup" file to "installd" without the quotes.
7. Install the application again. THE APP MUST EITHER BE FREE OR YOU MUST HAVE PAID FOR IT FOR IN-APP PURCHASE TO WORK.
8. Test the purchase. It should work correctly.
9. Go back in SSH (or using iFile from Cydia), and navigate to /private/var/stash/libexec/
10. Rename the "installd" file back to "installd.backup".
11. Rename the "installd.new" file back to "installd".
12. Done! You will have to do this every time you install a new application with In-App purchase.
In-App purchase should now work forever on the app that you reinstalled. This is because the "installd" file is the one that allows cracked app installation. This file, if present during the installation of an app with In-App purchase somehow breaks that process. In-App
purchase will work if the patch is not present on the installation of the app, even though it is after the installation.