Without getting too technical, the loophole could allow someone to send you a text message from a seemingly friendly number like your bank and then reroute your response to a hacker's number instead. From there, the hacker can obtain whatever personal information you provided.
Pod2g says this loophole has been present in all versions of Apple's iPhone software since the device first launched in 2007. It's also in the beta version of iOS 6, the next operating system for iPhone that will launch in the fall.
For now, the best way to protect yourself is to not trust text messages that ask for personal information.