GOOD NEWS I HAVE FOUND THE SOLUTION.
thanks to another online forum.
My wife has taken back her phone 4 times now to the store and got another brand new phone and nothing fixed it. This is because all the phones at that store came from the same batch or date manufactured.
Some dates are effected while others are not.
The problem is with the Noise Cancelation Device.
On the back at the top of the phone, above the camera is a little rubber strip cover. This is glued in place but with a thin knife you can easily and carefully remove this.
Behind it is a little metal strip that looks like the strip inside of a bus fuse. This strip spans across a little hole. This is the Noise Cancelation Device. This metal strip vibrates with background noise and tells the phone to cancel it out. The problem is some of them are too sensitive and cancel out your own voice.
The solution is to take a small piece of paper and push it under that metal strip in the hole so that it pushes slightly on the metal strip. This will stop it from being able to vibrate, thus deactivating the Noise Cancelation Device.
You may now here some background noise as if you were on a phone without this feature but you should hear the voice perfectly clear. I just did this this morning and it works perfectly.
Warning. This is probably technically a breach of your warranty. That is the reason for the paper instead of just taking out the metal strip. You can remove the paper before sending the phone in for service or replacement and no one will ever know that you messed with it.
Customer Service and Tech Support from Verizon or Motorolla will not give you any help. They will only replace your phone, and if it is past 30 days they will only give you a refurbished phone. This MAY solve your problem if the phone they give you is from a batch that works, or it may not. But they will not tell you how to fix it, cause they dont want you playing with it, and they wont fix it in the store because then they cant get their money back from motorolla either if they mess it up.
The real problem is that they have not communicated to the CSRs that this is the issue, and only have told them to replace the phone. When you have got 4 phones all with the same problem, the CSRs like anyone else with common sense come to the conclusion that it cant be the hardware and then they have no solution for you.
Verizon and Motorolla need to recall all phones from these batches and anyone who is having this problem should be send a pretested phone from a good batch. OR they should simply release a patch that disables the Noise Reduction Software. Until then a tiny little piece of paper will work.
They were 1.5 hours away from me mailing this back in and going to US Cellular. Good luck everyone.