From http://www.fmsfonline.org/hypnosis.html#chbf

In 1985, the Council on Scientific Affairs of the American Medical Association published a statement warning that "recollections obtained during hypnosis can involve confabulations and pseudomemories and not only fail to be more accurate, but actually appear to be less reliable than nonhypnotic recall." The fact that hypnosis might be involved in the formation of false memories was well-known before the false-memory phenomenon became a problem.

Hypnosis does not operate in a vacuum.

Hypnosis has been conceptualized as "imaginative involvement" (J. Hilgard, 1970/79), "believed-in imaginings" (Sarbin & Coe, 1974), and "delusion" (Sutcliff, 1961). As such, the role of hypnosis in creating false memories is likely one of facilitating and even hastening a process whereby a suggested fantasy of the past comes to be accepted as a "true memory." In other sections of this paper we explain elements of the hypnosis process that may be involved in facilitating belief in a false memory: Hypnotic susceptibility, Role of imagination, How hypnosis affects memory, Hypnotic hypermnesia, Confusion about dissociation and Age regression.

To appreciate fully the role of hypnosis in the creation of false memories, it is important to remember that false memories of childhood sexual abuse can develop without recourse to hypnosis. Although hypnosis might re-awaken childhood fantasies, it is in the context of the beliefs and actions of the hypnotist, an authority figure, that the fantasy might come to be interpreted as historically accurate. We look at the context, the beliefs and processes, in which hypnosis may facilitate false memories.

Experience in the various countries where false memories of childhood sexual abuse have surfaced in relatively large numbers in recent years reveals a consistent pattern of memory creation. What happens, typically, is that a demoralized adult (Frank & Frank, 1991) comes to believe that s/he cannot negotiate life's current difficulties alone and seeks out a therapist. The person is unfortunate enough to choose a therapist who believes that all psychological distemper, from abulia (chronic procrastination) to zoophilia (sexual attraction to animals), is the product of repressed memories of sexual abuse during childhood.

In addition to clinging to the over-simplified belief that all dysfunctions are causally linked to repressed incest memories, such therapists also believe that "recovering" abuse memories will provide the person with insight into his/her difficulties, and that this will lead to a dissipation of symptoms. (While it is true that knowing why one behaves in a maladaptive manner can be beneficial, there is no evidence that such insight necessarily leads to symptom reduction.) A therapist highly committed to this assumption takes a patient's disavowal of abuse as evidence of being "in denial." This diagnosis may be made without taking a full case history; it places the novitiate patient in a subtle bind. There is something wrong with the patient if he or she remembers -- that is, the patient has been abused. But there is also something wrong if he or she does not remember -- that is, the patient is in denial. Unless the patient decides to terminate therapy, he or she is embarking upon a long and gruelling odyssey in search of repressed memories of past events that may not have happened.

n this type of therapy, sometimes referred to as Recovered Memory Therapy (RMT), the therapist typically provides the patient with bibliotherapy. Often s/he is referred to the book best known for its commitment to a belief in the ubiquity of repressed incest memories: The Courage to Heal: A Guide for Women Survivors of Child Sexual Abuse by Ellen Bass and Laura Davis. (Bass and Davis are open about the fact that they have no professional training and have a lesbian perspective. (Bass & Davis, 1988, p. 14, 76-77) ) The suggestive power of this book has been shown in the uncanny resemblance of many accusations to the book's script for "recovering" repressed memories

In some cases, the diagnosis of MPD/DID may be made based upon the belief that people with multiple personality were sexually abused during childhood even though as adults they do not remember. Given that "remembering" plays such a critical role, hypnosis may be recommended for recovering lost memories. The therapist and patient likely hold the mistaken beliefs that hypnosis is highly effective in restoring "true memory" and that there is no need for independent corroboration for the reports that emerge with hypnosis. Of course, the problem is that hypnotically enhanced recall, while confidently believed, may be highly confabulated.