The problem occurs when your finger or hand covers the gap in the antenna that wraps around the phone. The tests show that can cause signal strength to drop significantly, or even lose a connection.
"Bottom line, we can't recommend the iPhone 4 until Apple fixes this design flaw," said Mike Gikas of Consumer Reports.
In the meantime, a class action lawsuit has been filed in Northern California because of the antenna problems. But many locals say that they are happy with the phone and haven't experienced any problems.
"I haven't experienced a reception issue. I think a lot of people are hyping it up a lot," said Louis Maskin of Pasadena.
One reason some iPhone owners are not having problems with reception is the use of a protective case that keeps the hand from touching the steel frame around the phone that is the antenna.
"I think the case is helping. I did have that problem before because I could not hold it a certain way, but with the case it's fine," said Kathy Holguin of Pasadena.
Apple has said that any phone will lose signal strength when gripped in certain ways. It said the iPhone 4 seems to show a larger drop because it has been using a faulty formula to decide how many signal bars to show.
But Consumer Reports said it tested several phones that use AT&T Inc.'s network, and only the iPhone 4 seemed to have the reception issue.