Federated Learning (FL) enables model development by leveraging data distributed across numerous edge devices without transferring local data to a central server. However, existing FL methods still face challenges when dealing with scarce and label-skewed data across devices, resulting in local model overfitting and drift, consequently hindering the performance of the global model. In response to these challenges, we propose a pioneering framework called \textit{FLea}, incorporating the following key components: \textit{i)} A global feature buffer that stores activation-target pairs shared from multiple clients to support local training. This design mitigates local model drift caused by the absence of certain classes; \textit{ii)} A feature augmentation approach based on local and global activation mix-ups for local training. This strategy enlarges the training samples, thereby reducing the risk of local overfitting; \textit{iii)} An obfuscation method to minimize the correlation between intermediate activations and the source data, enhancing the privacy of shared features. To verify the superiority of \textit{FLea}, we conduct extensive experiments using a wide range of data modalities, simulating different levels of local data scarcity and label skew. The results demonstrate that \textit{FLea} consistently outperforms state-of-the-art FL counterparts (among 13 of the experimented 18 settings, the improvement is over $5\%$) while concurrently mitigating the privacy vulnerabilities associated with shared features. Code is available at https://github.com/XTxiatong/FLea.git
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