Is there a problem with software 17.1.1 when near another iPhone?

That is absolutely not true. The sharing of contact information cannot be performed without explicit user permission

Contact information is not shared automatically, and it is a user-initiated process that requires both people exchanging information to accept the transfer.

You can choose the phone number and email address that you want to share with someone on the other end, and if someone is already in your Contacts app, it updates contact information.

News articles scaring people because some police department put out a warning about a feature they have no understanding of and no idea what they are talking about.

No.

No. What exactly is going on with your device to make you ask that?